2025 (6) TMI 1469 - AT - Income Tax

Validity of reopening of assessment u/s 147 - FAO did not provide the assessee a minimum period of four weeks to respond after disposing of the objections raised by the assessee against the reopening of the assessment - HELD THAT - In the case of Asian Paint Ltd. 2007 (1) TMI 159 - BOMBAY HIGH COURT wherein Hon ble Court has held that if the Assessing Officer does not accept the objections so filed he shall not proceed further in the matter within a period of four weeks from the date of receipt of service of the said order on objections on the assessee. Accordingly rule is made absolute . Examining the facts of the instant case in the light of above judgement in the case of Asian Paint Ld. (supra) we notice that the Ld. FAO disposed of the objection vide notice dated 16.03.2022 but he has concluded assessment proceedings on 24.03.2022 i.e. within a period less than four weeks. Therefore since the assessment order has been framed in less than four weeks from the date of disposing of both the objections on 08.03.2022 16.03.2022 case of the assessee stands squarely covered by in the case of Asian Paint Ltd. (supra) and therefore respectfully following the same we are inclined to hold that the assessment proceedings carried out in the case of the assessee deserves to be quashed as the same has not been carried out in accordance with the settled judicial precedents. Accordingly legal ground raised by the assessee is allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal question considered by the Tribunal was whether the assessment order framed by the Faceless Assessing Officer (FAO) for the Assessment Year 2017-18 was valid, given that the FAO did not provide the assessee a minimum period of four weeks to respond after disposing of the objections raised by the assessee against the reopening of the assessment. Specifically, the issue was whether the assessment proceedings complied with the procedural requirement established by the Hon'ble Jurisdictional Bombay High Court in the precedent case of Asian Paint Ltd. vs. DCIT, which mandates a four-week period after disposal of objections before further action can be taken.

2. ISSUE-WISE DETAILED ANALYSIS

Issue: Validity of the assessment order framed without providing four weeks' time after disposal of objections against reopening of assessment.

Relevant Legal Framework and Precedents: The relevant statutory provisions include Section 148 of the Income Tax Act, 1961, which empowers the Assessing Officer to reopen an assessment if certain conditions are met, and the procedural safeguards associated with it. The key precedent relied upon was the judgment of the Hon'ble Bombay High Court in Asian Paint Ltd. vs. DCIT, which held that if objections filed by the assessee against reopening are not accepted, the Assessing Officer must not proceed further in the matter within a period of four weeks from the date of receipt of service of the order disposing of the objections. This four-week period is intended to provide the assessee adequate opportunity to respond and ensure compliance with principles of natural justice.

Court's Interpretation and Reasoning: The Tribunal carefully examined the timeline of events as follows: the reopening notice under Section 148 was issued on 30.03.2021; the assessee filed objections against reopening on 01.03.2022; the FAO disposed of the objections on 08.03.2022; a second objection was raised by the assessee on 10.03.2022, which was disposed of on 16.03.2022. However, the assessment order was framed on 24.03.2022, which was less than four weeks from the date of disposal of the last objection. The Tribunal noted that the FAO did not allow the mandatory four-week period after disposing of the objections before concluding the assessment, thereby violating the procedural requirement established by the Bombay High Court.

Key Evidence and Findings: The records showed that the assessee's objections were disposed of on two occasions (08.03.2022 and 16.03.2022) and the assessment order was framed on 24.03.2022, which is within a week from the last disposal of objections. The assessee's reliance on the Asian Paint Ltd. judgment was supported by the undisputed timeline and procedural history.

Application of Law to Facts: Applying the principle from Asian Paint Ltd., the Tribunal found that the FAO's action of framing the assessment order within four weeks of disposing of the objections was procedurally flawed. The law requires a minimum four-week period to be provided to the assessee after disposal of objections before proceeding further. Since this procedural safeguard was not adhered to, the assessment order was rendered invalid.

Treatment of Competing Arguments: The Revenue's representative supported the lower authorities' orders but failed to effectively dispute the procedural non-compliance highlighted by the assessee. The Tribunal found no justification or explanation from the Revenue to counter the clear mandate of the four-week period as per the binding precedent.

Conclusions: The Tribunal concluded that the assessment proceedings were not in accordance with settled judicial precedents and, therefore, the assessment order framed for the Assessment Year 2017-18 deserved to be quashed. The Tribunal held that since the legal ground was allowed, examining the merits of the case would be academic and unnecessary.

3. SIGNIFICANT HOLDINGS

The Tribunal held verbatim that: "if the Assessing Officer does not accept the objections so filed, he shall not proceed further in the matter within a period of four weeks from the date of receipt of service of the said order on objections, on the assessee. Accordingly rule is made absolute."

Core principles established include the mandatory nature of the four-week period after disposal of objections against reopening of assessment, as a procedural safeguard to uphold principles of natural justice and ensure fair opportunity to the assessee.

The final determination was that the assessment order framed without observing the four-week period was invalid and liable to be quashed. The appeal of the assessee was allowed on this sole legal ground, without delving into the substantive merits of the assessment.