AO can continue proceedings even if reason supplied by him while rejecting objections not acceptable to assessee: HC

Case Details: Financial Software & Systems (P) Ltd. v. DCIT - [2021] 130 taxmann.com 381 (Madras)

Judicial and Counsel Details

• • S.M. Subramaniam, J.
  • N.V. Balaji for the Petitioner. 
  • D. Prabhu Mukunth Arunkumar, Standing Counsel for the Respondent.

Facts of the Case

Assessee was a ‘Payment Systems Company’ with domain expertise in financial transaction processing and payment solution. Its expertise includes transaction switching & payment systems; debit, prepaid, smart, and credit cards processing; front-end devices, host systems & interchanges; internet & Mobile payments; merchant management; system integration, financial inclusion & micro banking.

Assessing Officer (AO) issued a reassessment notice stating that he had reason to believe that the income chargeable to tax for the Assessment Year 2010 -11 has escaped assessment. Assessee submitted its objections to the reasons provided by AO for reopening the assessment. However, the AO disposed of the objections and issued notices
Assessee filed writ petition before the Madras High Court, contending that AO had not dealt with specific objections raised by it. Thus, the order of disposing of the objections was improper and liable to be set aside.

High Court Held

The Madras High Court held that the stage of initiation of reopening proceedings under section 147, what is contemplated is notice under section 148 within the time limit as prescribed under section 149. Thus, if any request is made by the assessee, the reasons are to be furnished by the Assessing Officer and the assessee is at liberty to submit its objections for the reasons and thus objections are to be disposed of by the AO.
Perusal of the objections raised and the reasons stated in the disposal of objections by the AO would be sufficient, and further details or scrutiny cannot be made by the High Court in writ proceedings. All such documents, materials or informations are to be considered by the AO while proceeding with the reassessment.

In the instant case, AO had given reasons for rejection of the objections. Such reasons may not be acceptable to the assessee. However, it was for him to provide further details or information to the AO while proceeding with the reassessment proceedings.