2002 JTR(SC) 1059
2003 2 AIC 677 ; 2003 179 CTR 11 ; 2003 259 ITR 19 ; 2002 9 JT 574 ; 2002 8 Scale 602 ; 2003 1 SCC 72 ; 2002 Supp4 SCR 359 ; 2002 125 Taxman 963 ; 2002 7 Supreme 322
2002(8) Supreme 322
SUPREME COURT OF INDIA
(From Delhi High Court)
Syed Shah Mohammed Quadri & Arijit Pasayat, JJ.
GKN Driveshafts (India) Ltd. -Appellant
versus
Income Tax Officer & Ors. -Respondents
Civil Appeal No. 7731 of 2002
(Arising out of SLP (C) No. 5520 of 2002)
With
Civil Appeal Nos. 7732, 7733-34, 7735, 7736 and 7737 of 2002
(Arising out of SLP (C) Nos. 5522, 5524-25, 5527, 5529 and 5531 of 2002)
Decided on 25-11-2002
Counsel for the Parties :
For the Appellant : M.L. Verma, Sr. Advocate, Jagdish Kumar Chawla, V.P. Gupta, R.K. Jain, Advocates.
For the Respondents : Ranbir Chandra, Ms. Neera Gupta, Rajiv Tyagi and B.V. Balaram Das, Advocates.
IMPORTANT POINT
When a notice under Section 148 Income Tax Act, 1961 is issued, the proper course for noticee is to file return and then to seek reasons and file objections to them on which assessing authority must pass a speaking order before proceeding with assessment.
Act Referred :INCOME TAX ACT : S.148, S.143(2)
(A) The impugned orders of the High Court pertain to appeals challenging notices issued under Sections 148 and 143(2) of the Income Tax Act, 1961. Section 148 empowers the Assessing Officer to conduct inquiries and reassess tax liability, while Section 143(2) relates to the completion of regular assessment and intimating the assessed tax. The Division Bench held that the appellant had a full opportunity to contest the notices by filing a reply with objections, and since the writ petition was filed at a stage where objections could still have been addressed, it was deemed premature.
(B) Key legal principles include that a noticee must file a return and can seek reasons for the notice; the assessing officer is bound to furnish reasons and dispose of subsequent objections with a speaking order before proceeding with assessment. An appeal against an assessment order is to be disposed of expeditiously by the appellate authority.
Facts of the case:
The appellant filed writ petitions challenging the validity of notices issued under Sections 148 and 143(2) of the Income Tax Act for seven assessment years. The High Court at Delhi dismissed the petition, observing that the appellant could have raised all objections in reply to the notices, and the writ was premature as assessments for two years were completed and appeals were pending for the remaining five years.
Findings of Court:
The High Court correctly held that the writ petition was premature because the appellant could have filed objections against the notices, and the assessing officer was required to pass a speaking order on those objections before assessment. The appellate bodies are directed to dispose of the appeals filed against the assessment orders expeditiously.
Issues:
Whether a writ petition challenging notices under Sections 148 and 143(2) is maintainable when the noticeee has an adequate opportunity to file objections and the assessment process is still pending.
Ratio Decidendi:
The writ petition was premature as the statutory procedure requires the noticee to first respond to the notice and file objections, which would be disposed of by a speaking order; hence, the High Court was correct in dismissing the petition.
Result:
The civil appeals are dismissed with no costs.
(A) The impugned orders of the High Court pertain to appeals challenging notices issued under Sections 148 and 143(2) of the Income Tax Act, 1961. Section 148 empowers the Assessing Officer to conduct inquiries and reassess tax liability, while Section 143(2) relates to the completion of regular assessment and intimating the assessed tax. The Division Bench held that the appellant had a full opportunity to contest the notices by filing a reply with objections, and since the writ petition was filed at a stage where objections could still have been addressed, it was deemed premature.
(B) Key legal principles include that a noticee must file a return and can seek reasons for the notice; the assessing officer is bound to furnish reasons and dispose of subsequent objections with a speaking order before proceeding with assessment. An appeal against an assessment order is to be disposed of expeditiously by the appellate authority.
Facts of the case:
The appellant filed writ petitions challenging the validity of notices issued under Sections 148 and 143(2) of the Income Tax Act for seven assessment years. The High Court at Delhi dismissed the petition, observing that the appellant could have raised all objections in reply to the notices, and the writ was premature as assessments for two years were completed and appeals were pending for the remaining five years.
Findings of Court:
The High Court correctly held that the writ petition was premature because the appellant could have filed objections against the notices, and the assessing officer was required to pass a speaking order on those objections before assessment. The appellate bodies are directed to dispose of the appeals filed against the assessment orders expeditiously.
Issues:
Whether a writ petition challenging notices under Sections 148 and 143(2) is maintainable when the noticeee has an adequate opportunity to file objections and the assessment process is still pending.
Ratio Decidendi:
The writ petition was premature as the statutory procedure requires the noticee to first respond to the notice and file objections, which would be disposed of by a speaking order; hence, the High Court was correct in dismissing the petition.
Result:
The civil appeals are dismissed with no costs.
Order
Heard learned counsel for the parties.
2. Leave is granted.
3. By the order under challenge, a Division Bench of the High Court at Delhi dismissed the writ petition filed by the appellant challenging the validity of notices issued under Sections 148 and 143(2) of the Income Tax Act, 1961. The High Court took the view that the appellant could have taken all the objections in its reply to the notices and that, at that stage, the writ petition was premature. Accordingly, the writ petition was dismissed on 31st January, 2001. Aggrieved by that order, the appellant is in appeal before us.
4. Mr. M.L. Verma, learned senior counsel appearing for the appellant, submits that the impugned notices relate to seven assessment years; that during the pendency of these appeals, in respect of two assessment years, viz., 1995-96 and 1996-97, assessment has been completed against which appeals have been filed. Notices relating to the other five assessment years, viz., 1992-93, 1993-94, 1994-95, 1997-98 and 1998-99, are now the subject-matter of these appeals.
5. We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under Section 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the assessing officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the abovesaid five assessment years.
6. Insofar as the appeals filed against the order of assessment before the Commissioner (Appeals), we direct the appellate authority to dispose of the same, expeditiously.
7. With the above observations, the civil appeals are dismissed.
8. No costs.
(N.K.R.) Appeals dismissed accordingly.
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