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HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR
MR. JUSTICE AVNEESH JHINGAN, MR. JUSTICE PRAMIL KUMAR MATHUR, JJ
Sandeep Stocks Pvt. Ltd. - Appellant
Versus
Assistant Commissioner Of Income Tax - Respondent
D.B. Civil Writ Petition No. 7463/2017
Decided On : 12-02-2025
(A) Income Tax Act, 1961 - Section 148 - Quashing of notice issued for reopening assessment - The petitioner filed returns for AY 2011-12, but the notice was issued without supplying material relied upon by the department - Supreme Court precedent established that reasons for reopening must be provided to the assessee for filing objections - Division Bench ruling emphasized that failure to supply material vitiates the reopening proceedings. (Paras 4, 5, 6)
(B) Procedural Fairness - The Assessing Officer must supply reasons and material to the assessee, and objections must be addressed in a reasoned order to ensure compliance with legal standards. (Paras 4, 5)
Facts of the case:
The petitioner filed income returns but faced reopening under Section 148 without receiving the necessary materials to contest the reopening. The objections raised were not addressed.
Findings of Court:
The order dated 17.02.2017 is set aside due to non-compliance with legal requirements regarding the supply of materials and addressing objections.
Issues: The main issues were whether the petitioner was entitled to receive the material relied upon for reopening and whether the objections were properly dealt with.
Ratio Decidendi: The court ruled that the failure to supply reasons and material for reopening is a violation of procedural fairness, necessitating the quashing of the notice and remitting the matter for proper consideration.
Result: Writ petition allowed.
Order :
AVNEESH JHINGAN, J.
1. This petition is filed seeking quashing of notice dated 27.09.2016 issued under Section 148 of the Income Tax Act, 1961 (for short ‘the Act’).
2. Brief facts are that the petitioner filed returns for the Assessment Year 2011-12 declaring total income of Rs.15,43,31,590/-. The proceedings under Section 148 of the Act were initiated by issuance of impugned notice. The objections filed by petitioner on 02.02.2017 were disposed of vide order dated 17.02.2017.
3. The grievance raised is that petitioner demanded the material relied upon by the department but neither the needful was done nor this objection was dealt.
4. In the case of Gkn Driveshafts (India) Ltd. vs. Income Tax Officer And Ors. reported in 259 ITR Page 19, the Supreme Court held that the assessee after filing the return in pursuance to the notice issued under Section 148 of the Act shall be supplied reasons for re-opening to which objections could be filed. The Assessing Officer was obligated to decide the objections by passing a reasoned order.
5. The Division Bench of this Court in the case of Micro Marbles Pvt. Limited Vs. Office of Income Tax Officer reported in (2023) 457 ITR 569 held that the material referred to and the reasons to believe should be supplied to the assessee. The operative part of the order is quoted below:-
“13. In view of the aforesaid facts and circumstances, we are of the opinion that shorn of all other technical aspects which may have been raised before us, the very fact that the material referred to in the “reasons to believe” was not supplied to the petitioner, the entire proceedings for the reopening of the assessment and leading to the consequential assessment stand vitiated in law.”
6. From perusal of the order dated 17.02.2017, it is evident that neither the material asked for was supplied to the petitioner nor the objection demanding the material was dealt with. Consequently, the order dated 17.02.2017 is set aside. The writ petition is allowed. The matter is remitted back to the respondent No.2 to decide the objections in accordance with law considering the law laid down by the Supreme Court in the case Gkn Driveshafts (India) Ltd. (supra) and the Division Bench of this Court in the case of Micro Marbles Pvt. Limited (supra).
7. In order to avoid further delay and complications, let the petitioner through his representative appear in the office of respondent No.2 on 12.03.2025 at 11:00 A.M.
The failure to supply reasons and material for reopening an assessment under the Income Tax Act violates procedural fairness, necessitating quashing of the notice.
The Assessing Officer must address objections to a notice under Section 148 of the Income Tax Act before proceeding with the assessment, as established by the Supreme Court.
The assessing officer must address objections raised by taxpayers in a speaking order when issuing notices under Section 148 of the Income Tax Act.
The challenge to a notice and order for reopening of assessment is maintainable when there is no statutory remedy available under the Act. Non-supply of material forming the basis for reopening the a....
The Assessing Officer is mandated to dispose of objections to reassessment notices by a speaking order before proceeding with the assessment.
Re-assessment under the Income-tax Act cannot be initiated after four years without specific allegations of failure to disclose material facts necessary for assessment.
Reopening of assessment under Section 148 requires valid reasons; mere incorrect information cannot justify such action.
Reopening of assessment under Section 148 is valid based on audit objections if the taxpayer fails to provide timely responses or necessary documentation.
An assessment order is invalid if objections raised by the taxpayer are not addressed prior to its issuance, ensuring due process in tax assessments.
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