2006 (11) TMI 166 - MADRAS HIGH COURT

Reopening of the assessment - notice issued u/s 143(2) - change of opinion - Non speaking order - Whether the Appellate Tribunal was right in law in treating the letter dated December 20, 2004, by the Assessing Officer is equivalent to a notice prescribed u/s 143(2), when the letter is nothing but furnishing the reasons for reopening the assessment? - HELD THAT:- Following the two High Court judgments in the case of CIT v. Gyan Prakash Gupta [1985 (7) TMI 9 - RAJASTHAN HIGH COURT] and in Sant Baba Mohan Singh v. CIT [1972 (1) TMI 28 - ALLAHABAD HIGH COURT]. We are of the view that there are only procedural irregularities committed by the Assessing Officer and hence the reassessment cannot be annulled.

Learned counsel for the assessee also relied on the Supreme Court judgment in the case of GKN Driveshafts (India) Ltd. v. ITO [2002 (11) TMI 7 - SUPREME COURT] to support his contention that objections were not considered by the Assessing Officer while completing the reassessment and hence the order of the reassessment is bad in law.

It is clear that the Assessing Officer has to furnish reasons, within a reasonable time and on receipt of the same, the assessee can file objection to the issue of notice and the Assessing Officer is bound to dispose of the same by a speaking order, before proceeding with the reassessment. In the present case, the objections have not been considered at all by the Assessing Officer before proceeding with the reassessment. Reassessment order was completed without considering the objections to the reopening of the assessment. It is nothing but a procedural defect and, therefore, it could not be held that the reassessment is a nullity in law.

Since we are of the view that these are only irregularities committed by the Assessing Officer (i.e.) not considering the objections as well as not issuing notice u/s 143(2) of the Act, before completing the reassessment, we set aside the order of the Tribunal as well as the lower authorities with a direction to the Assessing Officer to consider the matter afresh, particularly the objections given by the assessee for reopening and issue notice u/s 143(2) of the Act, after giving opportunity to the assessee to raise all contentions relating to the reopening of the assessment as well as the merits of the case and permit the assessee to produce materials and evidence, if any, and pass orders in accordance with law, as expeditiously as possible. As the matter is remanded, it is not necessary to answer the above questions of law, as the same is likely to adversely affect the rights of either parties.

Thus, the tax case is disposed of. Consequently, M. P. Nos. 1 and 2 of 2006 are closed.