Caps Gold Pvt.Ltd. vs. Dy. Commissioner of Income-tax and Another
What did the High Court hold?
The High Court, while acknowledging that the reasons for the Section 148 notice had now been furnished to the petitioner, chose not to examine them at that stage. Instead, the Court directed that the petitioner should file objections to the impugned notice within fifteen days from the date of the order. Following the receipt of these objections, respondent No. 1 (the assessing officer) was mandated to dispose of the objections by passing a speaking order within fifteen days of receiving them. This speaking order was to be communicated to the petitioner. The Court explicitly stated that all contentions were kept open. The writ petition was disposed of with these directions, and no costs were imposed. The ratio decidendi is that procedural fairness, including the opportunity to object to the reasons for reassessment and receive a reasoned order, must be afforded to the assessee before proceeding further with reassessment proceedings initiated under Section 148.
What were the facts?
The petitioner, Caps Gold Pvt. Ltd., filed a writ petition before the High Court of Telangana at Hyderabad challenging a notice dated March 31, 2021, issued under Section 148 of the Income Tax Act, 1961, by the Deputy Commissioner of Income-tax (respondent No. 1) for Assessment Year 2015-16. The notice proposed to re-assess the petitioner's income, stating that income chargeable to tax had escaped assessment. Initially, the petitioner contended that no reasons for the issuance of the notice were furnished. The respondents sought time to obtain and provide these reasons. Subsequently, the petitioner was served with the reasons recorded by the assessing officer.
What were the issues?
1. Whether the impugned notice dated March 31, 2021, issued under Section 148 of the Income Tax Act, 1961, for Assessment Year 2015-16 is illegal, arbitrary, and in violation of statutory provisions and the judgment of the Supreme Court in GKN Drivershafts (India) Ltd. v. ITO. Assessee's contention: The primary contention raised by the petitioner was that the reasons for issuing the Section 148 notice were not furnished to them, making the notice procedurally flawed. The petitioner relied on the Supreme Court's decision in GKN Drivershafts (India) Ltd. v. ITO, which mandates the furnishing of reasons. Revenue's contention: The revenue initially sought time to furnish the reasons recorded by the assessing officer. Subsequently, they produced a copy of the reasons recorded dated March 9, 2022, which had been communicated to the petitioner. The revenue indicated a desire for the court to examine these reasons.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
The Court made the following: ORDER Betwee n:
THE HON'BLE SRI JUSTICE UJJAL BHUYAN AND THE HON'BLE SRI JUSTICE A.\'ENKATESHN(ARA REDDY 20 f ORPER: ()er Hon'bb Si -[uttice ulial Bhayt) Heard Mr. Y'Rarnakar, leamed counsel for petitioner' and Mr. B.Narasimha Sarma, leamed Standing Counsel for the Income Tax Department for the resPondents'
By filing this petition under Article 226 of the C-onstitution of India, petitioner has challenged the legaliry and validity of notice dated 31.01.2021, issued by respondent No'1 under Section 148 of the Income Tax Act, 1961 @riefly'the Act' hereinafter) for the assessmeff year2015-16. 3. Bythe impugned notice, respondent No'1 has recorded that he has reasonstobelievethatincomeofthepetitioner'chargeabletotaxforthe assessment lear under consideration' has escaped assessment within the meaning of Section 147 of the Act. He has, therefore' proposed to re-assess the income of the petitioner for the said assessment par' in this connecdon, petitioner has been called upon to submit a retum i'n the I W.P.lJo.ri2o5 of 2o22 prcscribed form for the said assessmenr year within thiny dap from the service of notice.
When the mamer was taken up on 03.03.2022, we had queried Ieamed cournsel for the petitioner as to whether reasons for issuance of impugned nodce were fumished to the petitioner to which, leamed cor'rnsel for the petitioner submined that no such reasons were fumished. At that stage, leamed counsel for the respondents prayrd for time to obtain the reasors recorded by respondent No.1 for issuing the impugned notlce.
Today, when rhe matter is called upon, leamed counsel for the petitioner submits that petitioner was served lester-day, with a copy of the reasons recorded by the assessing officer 2.e., respondenr No.1 for issuance of impugned notice.
Leamed counsel for the respondenr has also produced before us a copy of the reasons recorded dated 0g.03.2022, which has been c ommruric ated to the petitioner.
Though leamed counsel for the respondents would lile us to go through rhe reasons recorded, we are nor incrined to do so at this stage in view of the order which we propose to pass in terms of the decision of 2
::3 W.P.No.112o5 of 2022 the the Supreme Coun in GKN DRIVESHAFTS (INDIA) LTD. v. Income Tax Officeri.
Since the ieasons have noq, been fumished to the petitioner, petitioner shall file objections to the impugned notice within a period of fifteen dap from today.
Upon receipt of such objections, respondent No.1 shall dispose of the same by passing a speaking order within a period of fifteen dap from the date of receipt of the objections, which should be communicated to the petitioner. 10. \X,/ith the above directions, 'Vrit Petition is disposed of. Related interlocutoryapplications, pending if any, stand disposed of.
All contentions are kept open.
No costs. '(2003) 1 SCC 72 SD/.K.AMMAJI ASSISTANT REGISTRAR //// 1 ,'' SECTION OFFICER To, 1. 2. a
MBC SB The Deputy Commissioner of lncometax and Another, Circle -1(1), l.T.Towers, A.G.Guards, Hyderabad. The Additional /Joint /Deputy/ AC of lncome tax, lncometax Officer, National Faceless Assessment Centre, Delhi. One CC to Sri Y Ratnakar Advocate [OPUC] One CC to Sri B Narasimha Sarma Advocate [OPUC] Two CD Copies One Spare Copy u{
HIGH COURT DATED: 0910312022 () .f .r'.) ORDER WP.No.11205 of 2022 DISPOSING OF THE WRIT PETITION a '1gilriii ?i1?' WITHOUT COSTS z#-=sr .;c_ SrarS \ \€.u'\t oq '- >J-,.z.d @ {L_- <tl
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