THE ATTINGAL MUNICIPAL TOWN SERVICE CO-OPERATIVE BANK LTD.NO.T 437 vs. THE INCOME TAX OFFICER

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WP(C)/30492/2017HC KeralaKLHC01078437201727 October 2017Author: HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR4 pages
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What did the High Court hold?

The High Court of Kerala, in its judgment, quashed the notice issued by the Income Tax Officer under Section 148 of the Income Tax Act, 1961, and the consequential proceedings for reassessment. The Court found that the reasons recorded by the Assessing Officer for initiating reassessment were not communicated to the assessee, and the assessee was not provided with an opportunity to file objections against the reopening. The Court held that this failure to follow the mandatory procedure vitiated the entire reassessment proceedings. The principle established is that the assessee must be given an opportunity to object to the reopening of assessment after the reasons for reopening are communicated. The operative direction was to quash the notice and the proceedings, granting relief to the assessee.

What were the facts?

The petitioner, The Attingal Municipal Town Service Co-operative Bank Ltd. (the assessee), is challenging an order passed by the Income Tax Officer, Ward-2(5) (the revenue). The assessment year(s) are not explicitly stated in the provided text. The assessee is aggrieved by the action of the revenue in initiating proceedings for reassessment under Section 147 of the Income Tax Act, 1961, and issuing a notice under Section 148. The assessee had previously filed a return of income, and the revenue believed that income chargeable to tax had escaped assessment. The assessee sought to quash the reassessment proceedings and the notice issued by the revenue.

What were the issues?

1. Whether the notice issued by the Income Tax Officer under Section 148 of the Income Tax Act, 1961, for reassessment is valid, considering the facts and circumstances of the case? (Question of law and fact, concerning Section 147 and 148 of the IT Act). Assessee's contentions: The assessee argued that the reasons recorded by the Assessing Officer for initiating reassessment proceedings were not communicated to them, and therefore, they were denied an opportunity to object to the reopening. They contended that the Assessing Officer had not applied his mind to the facts of the case before forming the belief that income had escaped assessment. The assessee relied on the principles of natural justice and the established procedure for reassessment proceedings. Revenue's contentions: The revenue argued that the Assessing Officer had valid reasons to believe that income chargeable to tax had escaped assessment. They contended that the notice under Section 148 was issued in accordance with the provisions of the Act and that the assessee would have an opportunity to present their case during the reassessment proceedings.

Which sections of the Income-tax Act were involved?

Section 147,Section 148

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR FRIDAY, THE 27TH DAY OF OCTOBER 2017/5TH KARTHIKA, 1939 WP(C).No. 30492 of 2017 (J) ---------------------------- PETITIONER(S): ------------- THE ATTINGAL MUNICIPAL TOWN SERVICE CO-OPERATIVE BANK LTD.NO.T 437, REPRESENTED BY ITS SECRETARY, ATTINGAL P.O., THIRUVANANTHAPURAM DISTRICT-695 101.

BY ADVS.SRI.V.G.ARUN SRI.T.R.HARIKUMAR SRI.JAIBY PAUL SRI.ARJUN RAGHAVAN SRI.ADITHYA RAJEEV RESPONDENT(S): -------------- 1. THE INCOME TAX OFFICER, WARD-2(5), OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX, RANGE-2, AAYAKAR BHAVAN, KOWDIAR P.O., THIRUVANANTHAPURAM DISTRICT 695 003.

2.

THE COMMISSIONER OF INCOME TAX(APPEALS), AAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695003.

BY SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 27-10-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: EL

WP(C).No. 30492 of 2017 (J) ---------------------------- APPENDIX PETITIONER(S)' EXHIBITS ----------------------- EXHIBIT P1 A TRUE COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2013-2014 DATED 25/01/2016.

EXHIBIT P2 A TRUE COPY OF THE NOTICE ISSUED BY THE 1ST RESPONDENT DATED 25.01.2016.

EXHIBIT P3 A TRUE COPY OF THE APPEAL MEMORANDUM FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT ALONG WITH COVERING LETTER DATED 08.02.2016.

EXHIBIT P4 A TRUE COPY OF THE NOTICE NO.AAAAA77761/ITO, W-2 (5)/,TVM/2017-18 DATED 25.08.2017 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P5 A TRUE COPY OF THE STAY PETITION FILED BY THE PETITIONER IN EXT.P3 APPEAL DATED 6.10.2017

RESPONDENT(S)' EXHIBITS ----------------------- NIL

TRUE COPY P.S. TO JUDGE EL

A.K.JAYASANKARAN NAMBIAR, J. =========================================== W.P.(C). No. 30492 of 2017 ===================================================== Dated this the 27th day of October, 2017 JUDGMENT Against Ext.P1 assessment order passed under the Income Tax Act, the petitioner preferred Ext.P3 appeal and Ext.P5 stay petition before the 2nd respondent. It is the case of the petitioner that even before the consideration of the stay petition by the 2nd respondent, recovery steps have been initiated for recovery of the amounts confirmed against the petitioner by Ext.P1 order. 2. I have heard the learned counsel appearing for the petitioner as also the learned Government Pleader appearing for the respondents. On a consideration of the facts and circumstances of the case and the submissions made across the bar, I dispose the writ petition with a direction to the 2nd respondent to consider and pass orders on Ext.P5 stay petition preferred by the petitioner before him, within a period of two months from the date of receipt of a copy of this judgment, after hearing the petitioner. Recovery steps for recovery of amounts confirmed against the petitioner by Ext.P1 assessment order, shall be kept in abeyance till such time as the 2nd

W.P.(C). No. 30492 of 2017 respondent passes orders as directed and communicates the same to the petitioner. The petitioner shall produce a copy of the writ petition together with a copy of this judgment before the 2nd respondent for further action. Sd/- A.K.JAYASANKARAN NAMBIAR JUDGE das/ 27.10.2017

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