Reassessment not Valid if Objection of assessee not disposed of

India Good News Associates Vs ITO (Allahabad High Court)

Reassessment order passed by Assessing Officer without disposing of objections raised by assessee to issuance of notice under section 148 of Income Tax Act, 1961 by a separate order, was not valid and thus, was liable to be quashed.

Heard Sri Amitabh Agarwal, learned counsel for the petitioner and Sri Gaurav Mahajan, learned counsel appearing for the respondents.

The petitioner has preferred this writ petition against the show cause notice dated 16-3-2018 issued under section 147 of the Income Tax Act, 1961 for the purposes of reassessment for the assessment year 2014-15.

The petitioner has been supplied with the ‘reasons to believe’ on which satisfaction has been recorded that the income of the petitioner has escaped assessment necessitating notice for reassessment.

The petitioner in response to the above notice and the ‘reasons to believe’ so supplied has filed objections but the same have not been considered as no order, if any, passed thereon has been supplied or intimated to the petitioner.

The submission of learned counsel for the petitioner is that the respondents can not proceed with the reassessment proceedings without deciding the objections and that in respect of the assessment year 2010-11 re-assessment on similar grounds was done and the said assessment is under challenge by the petitioner in appeal before the Commissioner (Appeals) which is pending. In GKN Driveshafts (India) Limited v. Income Tax Officer (2003) 259 ITR 19 (SC)  it has been held that once notice of reassessment is given, the assessee has a right to demand ‘reasons to believe’ and on supply of the reasons he may prefer objections and in case objections are so filed, the assessing officer is obliged to decide the same by a speaking order.

In view of the above, since the objections of the petitioner have not been considered and decided we deem it proper that the petitioner should wait for the decision of the same.

Accordingly, we are not inclined to exercise our discretionary jurisdiction in the matter at this stage and dispose of the writ petition with the direction that the respondent authority would before making the reassessment would decide the objections. The petitioner at the same time, if advised, may get the appeal in respect of the assessment year 2010-11 decided and it is expected that the appellate authority would consider the request of the petitioner for expeditious disposal and would oblige by deciding the appeal most expeditiously.

The writ petition stands dispose of with the above observation.