SHREE SHAKUNTALA INDUSTRIES vs. UNION OF INDIA AND ORS

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CW/7428/2004HC RajasthanRJHC02023637200425 April 2024Bench: AVNEESH JHINGAN,BHUWAN GOYAL3 pages
AI SummaryRemanded

What did the High Court hold?

The Tribunal held that the respondents (revenue authorities) are directed to proceed in accordance with the law laid down by the Hon'ble Supreme Court in the case of G.K. And Driveshafts (India) Ltd. This means the Assessing Officer must decide the objections filed by the petitioner by passing a speaking order before proceeding further with the notice issued under Section 148 of the Income Tax Act. The Tribunal did not decide on the merits of the reassessment proceedings themselves but focused on the procedural requirement of addressing the assessee's objections. The ratio decidendi is that the statutory requirement to furnish reasons for reassessment necessitates a corresponding obligation on the Assessing Officer to dispose of the assessee's objections thereto by a speaking order before continuing with the assessment.

What were the facts?

The petitioner, Shree Shakuntala Industries, filed an Income Tax Return for Assessment Year 2002-03, claiming a refund of Rs.1,50,253/-. The return was processed under Section 143(1). Subsequently, a notice under Section 148 of the Income Tax Act was issued on 09.12.2003. In response, the petitioner filed a revised return declaring an income of Rs.7,93,103/-. The reasons for initiating reassessment proceedings were provided to the petitioner on 04.08.2004, following which the petitioner filed objections. The primary grievance in the present petition is that these objections have not been considered or decided by the revenue authorities.

What were the issues?

1. Whether the Assessing Officer is bound to dispose of the objections filed by the assessee against the reasons for issuing a notice under Section 148 of the Income Tax Act by passing a speaking order before proceeding with the reassessment proceedings, as per the principles laid down in G.K. and Driveshafts (India) Ltd. vs. Income Tax Officer? (Question of law and fact, turning on Section 148 and principles of natural justice). Assessee's Contention: The petitioner argued that the Assessing Officer is obligated to consider and dispose of their objections by passing a speaking order before proceeding with the assessment, relying on the Supreme Court's decision in G.K. and Driveshafts (India) Ltd. The petitioner's grievance is that their objections have not been decided to date. Revenue's Contention: The judgment does not record any specific arguments made by the revenue.

Which sections of the Income-tax Act were involved?

Section 148,Section 143(1)

AI-generated summary — verify with the full judgment below

[2024:RJ-JP:19373-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 7428/2004 Shree Shakuntala Industries, Old Industrial Area, I.t.i. Road, Alwar Raj. Through Its Partner Anil ----Petitioner Versus 1. Union Of India Through Commissioner Of Income Tax, Alwar 2. Assistant Commissioner Of Income Tax, Circle-1 Near Moti Doongri, Alwar 3. Joint Commissioner Of Income Tax, Range-1, Near Moti Doongri, Alwar ----Respondents For Petitioner(s) : Mr. Anant Kasliwal, Senior Advocate assisted by Mr. Shashank Kasliwal Mr. Raghav Krishnatri Mr. Diwakar Khaldwa For Respondent(s) : Mr. N.S. Bhati & Mr. Aditya Khandelwal for Mr. Anuroop Singhi HON'BLE MR. JUSTICE AVNEESH JHINGAN HON'BLE MR. JUSTICE BHUWAN GOYAL Order 25/04/2024 AVNEESH JHINGAN, J (ORAL):- 1. This petition was filed challenging initiation of proceedings under Section 148 of the Act for AY 2002-03. 2. The brief facts are that the petitioner-firm filed Income Tax Return for the relevant AY and claimed a refund of Rs.1,50,253/-. 3. The return was processed under Section 143(1) of the Act. A notice bearing No.2841 dated 09.12.2003 was issued under Section 148 of the Act.

[2024:RJ-JP:19373-DB] (2 of 3) [CW-7428/2004] 4. The petitioner in response to the notice filed return declaring income of Rs.7,93,103/-. On 04.08.2004 the petitioner was supplied reasons for initiating reassessment. The petitioner filed objections. 5. The grievance raised in the petition is that the objections filed by the petitioner have not been considered till date. Reliance is placed upon decision of the Hon’ble Supreme Court in GK and Driveshafts (India) Ltd. Vs. Income Tax Officer and Ors. 2003 to 59 ITR Page 19. 6. The operational part of GK and Driveshafts is reproduced below: “5. We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under Section 148 of the Income tax Act is issued, the proper course of action for the notice is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the notice is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the assessing officer has to dispose of the objections, if filed, by passing a speaking Order before proceeding with the assessment in respect of the abovesaid five assessment years. 6. Insofar as the appeals filed against the order of assessment before the Commissioner (Appeals), we direct the appellate authority to dispose of the same, expeditiously. 7. With the above observations, the civil appeals are dismissed”

[2024:RJ-JP:19373-DB] (3 of 3) [CW-7428/2004] 7. In the present petition, the objections filed by the petitioner have not been decided. 8. The respondents are directed to proceed in accordance with law laid down by the Hon’ble Supreme Court in the case of GK And Driveshafts (supra) and to decide the objections before proceeding with the notice under Section 148 of the Act. 9. The petition is disposed of. (BHUWAN GOYAL),J (AVNEESH JHINGAN),J Payal/Sudeepak/26 Reportable: Yes

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