Wa/218/2015 Of M/S. Kothari Metals v. Income Tax Officer

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THRE 1 DAY OF AUGUST, 2015 PRESENT THE HON'BLE MR. JUSTICE VINEET SARAN AND| THE HON’BLE MR. JUSTICE B. MANOHAR %W.A.NO.218/2015(TIT) BEIWEEN: M/S.KOTHARI METALS.OMKAR HOUSE,|NO.8/1, 4 CROSS,KALASIPALYAM NEW EXTENSIONBANGALORE-560 002.REP. BY ITS PROPRIETOR.MR.SURESH KUMAR KOTHARI|S/O SHA POONAMCHAND GALBAJIAGEID) ABOUT 40 YBARS APPELLAN T (BY SRI HARISH V.S., ADV..,)BETWEEN: INCOME TAX OFFICERWARD 1(4), HMT BHAVAN,BANGALORE-560 032.| ~. RESPONDEN (BY SRI K.V.ARAVIND, ADV., A/W SRI E.LSANMATHI, ADV.,) THIS WA IS FILED U/S 4 OF THE KARNATKA HIGHCOURT ACT PRAYING TO SKIT ASIDE THR ORDER PASSED INTHE WRIT PETITION NO.14670/14 DATED 11.12.2014. THIS WA COMING ON FOR PRLY. HEARING THIS DAY,|VINFFT SARANDELIVERED THER FOLLOWING: JUDGMENT This is an appeal filed by the assessee against the judgementand order dated 11.12.2014 passed by the learned Single Judge inW.P.No.14670/2014 whereby the petition challenging the noticeunder Section 148 of the Income Tax Act, 1961 (for short ‘theAct) has been dismissed on the ground of availability ofalternative remedy. 2.The brief facts of this case are that for the!assessment year 2006-07 the appellant had filed its return ofincome, which was accepted under Section 143(1) of the IncomeTax Act, 1961 (for short ‘the Act’) on 14.06.2007. Subsequently,on 28.03.2013, notice under Section 148 of the Act was issued forre-opening of the assessment. In response to the same, theappellant requested the respondent to treat the earlier return filedas the return filed in response to the notice issued under Section148 of the Act. The appellant also prayed for furnishing thereasons for issuance of notice under Section 148 of the Act.Even when no reason for the issuance of the notice was furnishedto the appellant, the Assessing Officer commenced proceedingsfor re-assessment of the income of the assessee/appellant for the said assessment year and issued questionnaire under Section142(1) of the Act. 3 |From the questionnaire issued to the assessee, itappears that re-opening of the assessment was on the basis ofstatement recorded by the Income Tax authorities of some otherperson, which statement was never furnished to the appellant.The appellant, thus, contends that besides the non-furnishing ofthe reasons for fe-opening the assessment, principles of naturaljustice were also not complied in the present case in as much asthe appellant was not even furnished the statement, which wasrequired to be explained by the appellant before the AssessingOfficer. 4.sti K.V.Aravind, learned counsel appearing for therespondent has, however, submitted that since the re-assessmentorder has now been passed on 31.01.2014, the same can bechallenged in appeal and, as such dismissal of the writ petition onthe ground of availability of alternative remedy is pertectlyjustified. 5We have heard learned counsel for the parties and perused the record. 6.The question of non-furnishing the reasons forre-opening an already concluded assessment goes to the very rootof the matter. After filing of the return in response to the noticeissued under Section 148 of the Act or on request of the assesseerequesting that the return of income initially filed be treated as areturn of income filed 1n response to such notice, the assessee 1sentitled to be furnished the reasons for such re-opening, whichcan also be challenged independently. Since such reasons had notbeen furnished to the appellant, even though a request for thesame had been made, we are of the opinion that proceedings forthe re-assessment could not have been taken further on thissround alone. 5We have heard learned counsel for the parties and perused the record. 6.The question of non-furnishing the reasons forre-opening an already concluded assessment goes to the very rootof the matter. After filing of the return in response to the noticeissued under Section 148 of the Act or on request of the assesseerequesting that the return of income initially filed be treated as areturn of income filed 1n response to such notice, the assessee 1sentitled to be furnished the reasons for such re-opening, whichcan also be challenged independently. Since such reasons had notbeen furnished to the appellant, even though a request for thesame had been made, we are of the opinion that proceedings forthe re-assessment could not have been taken further on thissround alone. Ty.Besides this, it is not disputed that the statement ofsome other person which wasrecotded and the appellant was,asked to explain the same, was itself not furnished to theappellant-assessee. As such, besides non-furnishing of reasonsfor re-opening, there was also gross violation of principles ofnatural justice and in view of the aforesaid, we are of the opinion that writ petition against the re-assessment order dated 31.01.2014ought to have been entertained and that dismissal of the writpetition on the ground of availability of alternative remedy wasnot justified in the facts of the present case. | 8.Since we ate of the opinion that the re-opening of assessment under Section 143 of the Act was itself bad in law, weset-aside the order passed by the writ Court and as well as there-assessment order dated 31.01.2014. Accordingly,this appealas well as the writ petition stand allowed. Q |However, it may be observed that the respondentshall be at liberty to proceed in the matter, in accordance with law,after furnishing reasons for issuance of notice under Section148 of the Act, if law so permits. No order as to costs. All pending applications stand consigned to file. Sd/- JUDGE) Sd/-. JUDGE| TL