INCOME TAX ACT, 1961

Section 148

Reassessment - Notice under section 148 - Non-disposal of assessee's objections by passing of speaking order -

Assessee challenged notice issued by AO under section 148 contending that order disposing of objections was nothing, but an eye wash and could be termed as erroneous in law. Assessee submitted that reasoning of AO that an amount of cash to the tune of Rs. 1,40,00,000 paid by assessee to the Venus Group was required to be taxed as same had escaped assessment for the assessment year 2015-16, which was made the basis for reopening, was factually incorrect because assessee in fact, had made payment by cheque to Venus Group, while department recorded a factually incorrect reason that, made cash payment to the Venus Group.Held: The noticee i.e, assessee was entitled to file his objections and AO, in turn, was obliged to dispose of the objections by passing a speaking order. Though AO had an opportunity at the stage of dealing with the objections to verify contention of assessee, which went to the root of matter, he very conveniently ignored the issue by taking a stance that factual proposition would be examined at the time of reassessment proceedings after giving sufficient opportunity to the assessee. Such stance of AO would lead to prima facie belief that AO had no good reason to issue the impugned notice for reopening. Had AO been more pro-active, he would have realized upon looking into the objections raised by assessee that issuing notice for the assessment year 2015-16 could be a mistake. Therefore, AO had no material to suggest that assessee made payment in cash to Venus group and thereafter, received the same amount back through RTGS. Accordingly, notice under section 148 was set aside and issue was remanded to AO for fresh consideration of the objections raised by assessee.

Relied:GKN Driveshafts (India) Ltd. v. ITO & Ors. (2003) 259 ITR 19 (SC) : 2003 TaxPub(DT) 0734 (SC)

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2015-16

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