Case Law Details
Brief of the Case
Karnataka High Court held In the case of M/s Kothari Metals vs. ITO that in this case it is clear that the assessee was not provided reasons for re-opening and also the statement recorded by the AO was not available to the assessee. As there is gross violation of principles of natural justice, we are of the opinion that writ petition against the re-assessment order ought to have been entertained and dismissal of the writ petition on the ground of availability of alternative remedy was not justified in the facts of the present case.
Facts of the Case
The assessee filed his return of income for the assessment year 2006-07 which was accepted under Section 143(1). Subsequently notice under Section 148 was issued for re-opening of the assessment. In response to the same, the appellant requested the respondent to treat the earlier return filed as the return filed in response to the notice issued. The appellant also prayed for furnishing the reasons for issuance of notice under Section 148 of the Act. Even when no reason for the issuance of the notice was furnished to the appellant, the Assessing Officer commenced proceedings for re-assessment of the income of the assessee/appellant for the said assessment year and issued questionnaire under Section 142(1). From the questionnaire issued to the assessee, it appears that re-opening of the assessment was on the basis of statement recorded by the Income Tax authorities of some other person, which statement was never furnished to the appellant. Assessee filed a writ petition which was dismissed on the ground that the assessee had alternate remedy to appeal.
Contention of the Assessee
The ld counsel of the assessee contended that besides the non-furnishing of the reasons for re opening the assessment, principles of natural justice were also not complied in the present case in as much as the appellant was not even furnished the statement, which was required to be explained by the appellant before the Assessing Officer.
Contention of the Revenue
The ld counsel of the revenue submitted that that since the re-assessment order has now been passed on 31.01.2014, the same can be challenged in appeal and, as such dismissal of the writ petition on the ground of availability of alternative remedy is perfectly justified.
Held by High Court
The question of non-furnishing the reasons for re-opening an already concluded assessment go to the very root of the matter. After filing of the return in response to the notice issued under Section 148 of the Act or on request of the assessee requesting that the return of income initially filed be treated as a return of income filed in response to such notice, the assessee is entitled to be furnished the reasons for such re-opening, which can also be challenged independently. Since such reasons had not been furnished to the appellant, even though a request for the same had been made, we are of the opinion that proceedings for the re-assessment could not have been taken further on this ground alone. Also, it is not disputed that the statement of some other person which was recorded and the appellant was asked to explain the same, was itself not furnished to the assessee.
As such, besides non-furnishing of reasons for re-opening, there was also gross violation of principles of natural justice and in view of the aforesaid, we are of the opinion that writ petition against the re-assessment order dated 31.01.2014 ought to have been entertained and that dismissal of the writ petition on the ground of availability of alternative remedy was not justified in the facts of the present case.
Accordingly, appeal of the assessee allowed.
