The Gujarat High Court ruled that the Assessing officer lacked material to suggest payment made in cash and received the same amount back through the RTGS.
The writ applicant, Purshottambhai Bachubhai Pitroda challenged the notice of reopening of the assessment issued under Section 148 of the Income Tax Act, 1961 for the Assessment Year 2015- 2016.
The return of income was filed for the year under consideration, but no scrutiny assessment under Section 143 (3)of the Act, was made. The return, in such circumstances, was processed under Section 143 (1) of the Act.
The AO reopened the assessment on the ground that cash payment of Rs.1,40,00,000/- by M/s J P Fabricators to Venus Group from whom accepted accommodation entries of loan by assessee in books of account which, required to be taxed, has escaped assessment in the assessment year 2015-16 in question” By the reason of failure on the part of the assessee to not disclose fully and truly all material facts in return of income necessary for’ assessment.
The assessee objected to the reopening on the grounds that the AO stated the reasons about the payment of cash to Sanjeet Motor Finance P. Ltd and the assessee has received through RTGS back, which is not correct.
“The assessee has actually received loan during F.Y. 2011-12 & 2012-13 i.e. A.Y. 2012-2013 & 2013-2014. During A.Y. 2015-2016 the said loan is repaid in installments through RTGS. The assessee has not received any loan from Sanjeet Motor Finance P. Ltd. in cash. It appears that the AO has mainly relief upon the information received without verifying the books of accounts,” the assessee while filing the objection said.
The assessee contended that the reopening of the assessment is bad in law. The copy of accounts of Sanjeet Motor Finance P. Ltd. from the books of the assessee was enclosed.
The division bench of Justice J.B.Pardiwala and Illesh J.Vora quashed and set aside the order disposing of the objections passed by the Assessing Officer and remit the matter to the Assessing Officer for fresh consideration of the objections raised by the assessee.
The court said that on receipt of the reasons, the noticee is entitled to file his objections and the Assessing Officer, in turn, is obliged to dispose of the objections by passing a speaking order. Though the Assessing Officer had an opportunity at the stage of dealing with the objections to verify the contention of the writ applicant, which went to the root of the matter, he very conveniently ignored the issue by taking a stance that the factual proposition would be examined at the time of reassessment proceedings after giving sufficient opportunity to the assessee.
The court remitted the matter back to the Assessing Officer for fresh consideration of the objections in accordance with law. The Assessing Officer shall decide the objections in accordance with law by passing a speaking order within four weeks.
“In the event, if the order is adverse to the assessee, then it shall be open for the assessee to take r-ecourse available to him in law within a period of four weeks from the date of receipt of the fresh order that may be passed by the Assessing Officer,” the court said.
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