Bombay HC quashes Income Tax Notice seeking Reopening of Assessment on Incorrect Facts [Read Order]

In a recent decision the Bombay High Court quashed an income tax notice seeking reopening of the assessment on incorrect facts.

The petitioner in the present matter is Arvind Sahdeo Gupta. The challenge raised in the writ petition is to the notice issued by the Income Tax Officer Ward under Section 148 of the Income Tax Act, 1961. A further consequential prayer seeks quashing of the assessment that has been completed.

The challenge raised to the notice issued under Section 148 of the Income Tax Act of 1961 is principally on the grounds that the said notice has been issued on incorrect facts, no reasons have been given while deciding the objections raised by the petitioner to the re-opening of the proceedings and the same have been decided without passing any speaking order. In addition, it was urged that the re-opening of the proceedings is without there being any independent application of mind and no reasons to believe have been indicated by the Income Tax Officer in that regard.

Kapil Hirani, Counsel for the petitioner submitted that the Assessing Officer disposed of the objections raised by the petitioner without passing any speaking order, the same was contrary to the said directions. In addition to aforesaid, it was submitted that no reasons whatsoever were indicated by the ITO while disposing of the objections. The transaction in question pertained to the Assessment Year 2012-13 and not the Assessment Year 2013-14. This aspect went to the root of the matter but there was no consideration of the same.

It was further argued that the notice issued under Section 148 of the Income Tax Act was liable to be set aside. Though the assessment had been completed by passing order and the petitioner had filed an appeal by way of abundant precaution, the challenge in the present proceedings was restricted to the legality of the notice issued under Section 148 of the Income Tax Act.

A Division Bench comprising Justices Vrushali V Joshi and AS Chandurkar observed that “The notice suffers from fundamental factual errors. An exceptional case thus having been made out to interfere in exercise of writ jurisdiction, the impugned notice issued under Section 148 of the Income Tax is quashed and set-aside. Consequentially, further steps taken by the respondents based on said notice would no longer survive.”

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