Income Tax Assessing Officer has to dispose of objections before invoking re-assessment proceedings

Karnataka High Court: While delivering the judgment in the writ appeal filed under Section 4 of the Karnataka High Court Act praying to set aside the order passed in Writ Petition No. 16380 of 2015, a two-Judge Bench comprising of Jayant Patel and N.K. Sudhindrarao, JJ. held that it is obligatory on the part of the Assessing Officer to dispose of the objections before invoking the re-assessment proceedings.

The Assessing Officer issued notice to the appellant under Section 148 of the IT Act for re-assessment for the year 2007-08. Appellant requested the Officer to furnish the reasons. Assessing Officer furnished the reasons for re-assessment. The appellant filed objections. The Assessing Officer, without disposing of the objections proceeded with the assessment and issued a demand notice. Aggrieved, the appellant filed a writ petition. The learned Single Judge dismissed the petition on the ground of availability of alternative remedy. Hence, this appeal.

The Court held that if the assessee desires to seek reasons for issuing the notice, the Assessing Officer is bound to furnish the same. And upon the receipt of such reasons, the assessee is entitled to file the objections, and the Assessing Officer thereafter is bound to dispose of the same by a speaking order. It is only thereafter that the assessment may proceed in accordance with law.

Under the circumstances of the case, the Court held that the mandatory procedure of disposal of objections by the Assessing Officer before proceeding with the assessment was not followed and exercise of power was vitiated, and assessment order cannot be sustained. It was further held that if the decision of the Assessing Officer is illegal in the face of it, it would fall in the exceptional category of making departure from the normal principle of self imposed limitation of not to interfere in a matter where there is existence of alternative remedy. Accordingly, the appeal was allowed and the impugned order passed by the learned Single Judge was set aside. [M/s. Deepak Extrusions Pvt. Ltd. v. The Deputy Commissioner of Income Tax, 2017 SCC OnLine Kar 1566, decided on 15.03.2017]

 

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