THE UGAR SUGAR WORKS LTD. vs. ASST. COMMISSIONER OF INCOME TAX CIRCLE SANGLI AND ORS

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WP/3631/2022HC BombayHCBM07012947202222 January 2024Bench: HON'BLE SHRI JUSTICE K.R. SHRIRAM,HON'BLE JUSTICE DR. NEELA KEDAR GOKHALE3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the reasons provided for reopening were indeed incomplete and that the petitioner was not given an effective opportunity to deal with the reasons to believe that there was an escapement of income for Assessment Year 2013-2014. The Court found a discrepancy between the reasons communicated earlier and those annexed to the Section 151 approval, confirming the petitioner's claim of being prejudiced. Consequently, the impugned order dated February 16, 2022, and the subsequent assessment order dated March 25, 2022, were quashed and set aside. The matter was remanded for de novo consideration. The petitioner was directed to file detailed objections to the Section 148 notice. The Assessing Officer was instructed to provide any requested documents within two weeks of the request and to pass a reasoned order disposing of the objections after granting a personal hearing. Reassessment proceedings are to be completed by April 30, 2024, and if objections are not accepted, the reassessment order by June 30, 2024. The Court explicitly stated that no observations were made on the merits of the matter.

What were the facts?

The petitioner, The Ugar Sugar Works Limited, filed a writ petition challenging the order dated February 16, 2022, which disposed of its objections to a notice issued under Section 148 of the Income Tax Act, 1961, for the Assessment Year 2013-2014. The petitioner argued that the reasons provided for reopening were incomplete and that it was not given an adequate opportunity to raise all objections. The reasons, along with the approval under Section 151, were provided to the petitioner only a day before the impugned order was passed. The petitioner also noted a discrepancy between the reasons communicated on April 30, 2021, and those annexed to the Section 151 approval.

What were the issues?

1. Whether the reasons provided for reopening the assessment under Section 148 of the Income Tax Act, 1961, were incomplete, thereby denying the petitioner an effective opportunity to raise objections? (Question of law and fact) Assessee's Contention: The reasons provided for reopening were incomplete. The reasons annexed to the approval under Section 151 of the Act were made available to the petitioner only on February 15, 2022, a day before the impugned order disposing of objections was passed on February 16, 2022. This prevented the petitioner from effectively raising all objections to the reopening. Revenue's Contention: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 148,Section 151

AI-generated summary — verify with the full judgment below

1/3 432(I).WP-3631-2022.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION

WRIT PETITION NO.3631 OF 2022 The Ugar Sugar Works Limited ….Petitioner V/s. Assistant Commissioner of Income Tax, Circle, Sangli and Ors. ....Respondents ---- Mr. Riyaz Padvekar a/w. Mr. Tanzil R. Padvekar and Ms. Tejal P. Kharkar for petitioner. Mr. Suresh Kumar for respondents – Revenue. ---- CORAM : K. R. SHRIRAM & DR. NEELA GOKHALE, JJ.

DATED : 23rd JANUARY 2024 P.C. : 1 One of the main ground in the petition is that the reasons provided for reopening, post issuance of notice under Section 148 of the Income Tax Act, 1961 (the Act) (pre 1st April 2021), was incomplete reasons as it appears from the reasons annexed to the approval under Section 151 of the Act. 2 It is stated that these reasons with the approval under Section 151 of the Act was made available to petitioner on 15th February 2022 just a day before the impugned order dated 16th February 2022 disposing petitioner’s objections was passed. Mr. Padvekar states that, therefore, petitioner was not given an opportunity to effectively raise all objections to the reopening. Gauri Gaekwad This order has been modified by speaking to the minutes of the order dated 21.3.2024 2024:BHC-AS:14196-DB

2/3 432(I).WP-3631-2022.doc 3 We have also compared the reasons that were made available to petitioner vide communication dated 30th April 2021 and the reasons annexed to the approval under Section 151 of the Act. What was made available was incomplete. Therefore, we are satisfied that petitioner was not given an opportunity to effectively deal with the reasons to believe that there was escapement of income for Assessment Year 2013-2014. 4 Therefore, we hereby quash and set aside the impugned order dated 16th February 2022 and remand the matter for denovo consideration. 5 In view of the above, the assessment order dated 25th March 2022 also is hereby quashed and set aside. 6 Petitioner shall file detailed objections to the notice dated 31st March 2021 issued under Section 148 of the Act. Should petitioner wish to receive any documents relied upon in the reasons to believe escapement of income, petitioner shall, within two weeks from the date this order being uploaded, apply to the Assessing Officer providing the list of documents/details required. The Assessing Officer shall make available those documents/details within two weeks of receiving the request and the link be made available to petitioner in the portal as well as by email. If any part of the document is required for further investigation and it does not pertain to petitioner, such portions could be redacted. After petitioner files the objections, the Assessing Officer shall pass a reasoned order to dispose Gauri Gaekwad This order has been modified by speaking to the minutes of the order dated 21.3.2024

3/3 432(I).WP-3631-2022.doc the objections in accordance with law. The Assessing Officer shall deal with every point raised by petitioner. Before passing any order, personal hearing shall be granted notice whereof shall be communicated atleast five working days in advance. The proceeding will be concluded on or before 30th April 2024. 7 After passing an order disposing objections filed by petitioner, in case the objections are not accepted by the Assessing Officer, then the Assessing Officer should complete reassessment proceedings on or before 30th June 2024 as per the provisions of law. 8 Petition disposed. 9 We clarify that we have not made any observation on the merits of the matter. (DR. NEELA GOKHALE, J.) (K. R. SHRIRAM, J.) Gauri Gaekwad This order has been modified by speaking to the minutes of the order dated 21.3.2024 Signed by: Gauri A. Gaekwad Designation: PS To Honourable Judge Date: 22/03/2024 17:12:53

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