M/S UNITED GLOBAL CORPORATION LIMITED V. DEPUTY COMMISSIONER OF INCOME TAX

WP/7225/2023

AI Insights

The case involves M/s. United Global Corporation Limited, which challenged the assessment order and related actions taken by the Income Tax authorities for the assessment year 2016-17. The petitioner argued that the Assessing Officer did not properly consider their objections to the reopening of the assessment under Sections 143(3) and 147 of the Income Tax Act, 1961. The court examined whether the objections raised by the petitioner were adequately addressed before proceeding with the assessment. The court referenced the Supreme Court's decision in GKN Driveshafts (India) Ltd vs. Income Tax Officer, emphasizing the need for a preliminary adjudication on such objections.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 690122 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 31-03-2023
• Assessment Year: misc
• Other Referred Cases: GKN Driveshafts (India) Ltd Vs. Income Tax Officer And Ors, MPHASIS LTD. VS. ACIT AND ORS.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: E I SANMATHI
• Assessee Lawyers: M V SESHACHALA; ARAVIND CHAVAN
• Keywords: Assessment Order; Income Tax; Jurisdiction; Objections; Rectification; Reopening assessments
• Section: 147; 148; 143(3); 142(1); 148A; 226(3)

Judgement Text

"- 1 - WP No. 7225 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 31ST DAY OF MARCH, 2023 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 7225 OF 2023 (T-IT) BETWEEN: M/S. UNITED GLOBAL CORPORATION LIMITED REGISTERED COMPANY E-07, 7TH FLOOR, #2, 1ST FLOOR, JC ROAD, PURNIMA TALKIES, BANGALORE - 560 027 REP. BY ITS DIRECTOR, SRI MYNENI VAMSIDHAR (REGISTERED UNDER COMPANIES ACT) …PETITIONER (BY SRI. M.V. SESHACHALA, SR. ADVOCATE FOR SRI. ARAVIND V CHAVAN., ADVOCATE) AND: 1. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -2 (4), C.R.BUILDING, QUEENS ROAD, BANGALORE - 560 001. 2. PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, C.R.BUILDING, QUEENS ROAD, BANGALORE - 560 001. …RESPONDENTS Digitally signed by NARASIMHA MURTHY VANAMALA Location: HIGH COURT OF KARNATAKA - 2 - WP No. 7225 of 2023 (BY SRI.E.I.SANMATHI, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT SUBSTITUTION OF SECTIONS 147, 148, 143 AND 142 OF THE IT ACT WITH SECTIONS 147, 148 AND 148A OF THE IT ACT WITH EFFECT FROM 01.04.2021 WILL NOT ENABLE THE ASSESSING OFFICER TO HAVE RECOURSE TO THE EARLIER PROVISIONS FOR PASSING ASSESSMENT ORDER AFTER THAT DATE; TO DIRECT THE ASSESSING OFFICER TO CONSIDER THE OBJECTIONS FILED BY THE ASSESSES ON 12.03.2022 ANNXURE-E1 AND 23.03.2022 ANNXURE-E3 AND PASS A PRELIMINARY ORDER REGARDING JURISDICTION TO REOPEN ASSESSMENTS AS HELD BY THIS HON'BLE COURT IN MPHASIS LTD. VS. ACIT AND ORS., WP NO.3533/2019 DD. 14.02.2019 ANNXURE-L; TO QUASH THE ORDER OF RECTIFICATION DATED 19.01.2023 BEARING NO. ITBA/REC/M/154/2022-23/1048933213 (1), ANNXURE-G2 AND THE ASSESSMENT ORDER DATED 30.03.2022 BEARING NO. ITBA/AST/M/147/2021-22-1042337735(1) ANNXURE-F PASSED BY THE SECOND RESPONDENT IN RESPECT OF THE ASSESSMENT YEAR 2016-17; TO QUASH THE NOTICES ISSUED U/S 226(3) OF THE IT ACT DATED 07.03.2023 BEARING NO.ITBA/COM/F/17/2022- 23/1050485416(1) ANNXURE-H3 AND 25.01.2023 - 3 - WP No. 7225 of 2023 DISPOSING OF THE STAY APPLICATION BEARING F.NO.25(184) STAY/PR.CIT(C)/2022-23 ANNXURE-H2. THIS PETITION, COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioner has impugned the assessment order dated 30.03.2022 [Annexure-F] for the assessment year 2016-17 under Section 143(3) read with Section 147 of the Income Tax Act, 1961 (for short, 'the I.T. Act') and for directions to the Assessing Officer to consider the petitioner's objections dated 12.03.2022 and 23.03.2022 filed in response to the notices issued under Section 142(1) of the IT Act and the reasons offered on 19.03.2022. Sri.M.V.Seshachala, the learned Senior counsel for the petitioner, and Sri. E.I.Sanmathi, the learned counsel for the respondents, are heard for final disposal. As emphasized by Sri. M.V.Seshachala, the petitioner, upon service of notice under Section - 4 - WP No. 7225 of 2023 143(2) of the IT Act on 05.03.2022, has filed objections inter alia asking for reasons to believe that there must be assessment and in response, the Assessing Officer has issued reasons on 19.03.2022. The petitioner has responded by filing objections dated 23.03.2022, and the Assessing Officer, while passing the impugned order dated 30.03.2022, has adverted to the objections filed without considering the merits thereof. The Assessing Officer's advertence to the petitioner's objections to the reasons offered can be found in paragraph No.3 of the assessment order, which reads as hereunder: \"The assessee was served with Reasons for reopening u/s 147 of IT Act, 1961 vide letter dated 15.11.2021. The assessee raised various objections against the reasons for reopening. In response, the objections raised by the assessee were disposed off vide letter dated: 19.03.2022 bearing DIN No. ITBA/AST/F/17/2021- 22/1041027234(1). It is pertinent to mention here that the case is within the ambit of 4 years as the approval to reopen the case was received on 31.03.2021. Since, the case was opened - 5 - WP No. 7225 of 2023 within 4 years from the end of Assessment Year 2016-17, the assessee objection regarding the above issue is herby rejected and disposed off.\" 3. It is salient that there must be a preliminary adjudication on the objections to the reasons and if the reasons are offered but objections thereto are not considered, the procedure that is followed consequent to the decision of the Hon'ble Supreme Court in GKN Driveshafts (India) Ltd Vs. Income Tax Officer And Ors1, which is now statutorily affirmed with the amendment would be rendered redundant. Therefore, on this limited ground, which is presented as an alternative ground, must be accepted and the impugned assessment order quashed with the proceedings restored to the Assessing Officer for reconsideration after issuance of notice of personal hearing on the objections filed in response to the reasons offered. Hence, the following: 1 [2003] 259 ITR 19 - 6 - WP No. 7225 of 2023 ORDER [a] The petition is allowed in part quashing the impugned order dated 30.03.2022 [Annexure-F] restoring the proceedings to the jurisdictional Assessing Officer - the first respondent for reconsideration after extending due opportunity. [b] Consequent to this order, the orders on rectification dated 19.01.2023 [Annexure-G2] and the notice dated 07.03.2023 [Annexure-H3] issued under Section 226(3) of the IT Act are quashed. SD/- JUDGE RB "