Reassessment notice: remedy for taxpayer
What is the remedy for the
taxpayer against
indiscriminate use of
notices to rake up a review
of a completed assessment
or even a return accepted
without regular
assessment?
The law relating to the
procedure, where jurisdiction
is questioned by the assessee
is well set after the
decision in G. K. N. Driveshafts
(India) Ltd. v ITO
(2003) 259 ITR 19 (SC). An
assessee, where he apprehends
lack of jurisdiction,
can ask for a copy of the recorded
reasons. Where there
is such a request, it is the
duty of the assessing officer
to "furnish the reasons recorded
in the assessment records....".
Even if a request is
made after the return is
filed, it has to be complied
with. The assessee has then
the right to object to the jurisdiction
with reference to
the recorded reasons.
Where there is such an objection,
it is the duty of the
assessing officer to dispose
of such objection by a speaking
order before proceeding
further with the matter. A
writ will lie only if he fails to
pass such an order. The High
Court in Tolins Rubbers v
Asst.CIT (2004) 270 ITR
280 (Ker) required the assessee
to file its objections
before the assessing officer
and the assessing officer to
deal with them in a speaking
order.
A writ petition without
raising objection to the assessing
officer, when he had
already communicated the
reasons for issue of notice,
was therefore dismissed as
premature with an opportunity
for the assessee to revive
the writ petition in case
it becomes necessary after
the order of the assessing officer
as held in Arvind Mills
Ltd. v Asst. CWT (No.1)
(2004) 270 ITR 467 (Guj).
It is, therefore, necessary
for a taxpayer to ask for recorded
reasons and where he
finds that such reasons do
not accord with the requirement
of law to lodge an objection
to the jurisdiction
and await the assessing officer's
order thereon. He is
entitled to file a writ, if such
an order is not acceptable.
But he may opt for the less
expensive course of participating
in further proceedings
after recording his
objection to the jurisdiction.
Where he is not convinced
about the assessing officer's
order on his objection, it
may be remembered that if
he does not formally place
his objection, his participation
may shut him out from
questioning the jurisdiction
in appeal, even if it is otherwise
justified, because of
Sec. 292BB inserted by the
Finance Act, 2008. This provision
bars an assessee, who
has not raised an objection
before the completion of assessment
in pursuance of
such notice, if he has participated
in the proceedings
without raising objections
after receiving the assessing
officer's order upholding his
jurisdiction. Sec. 292BB
provides that even in cases,
where no notice had been
served or not served within
the time limit or not served
in a proper manner, an objection
in this regard cannot
be raised, if the assessee has
not raised the objection before
completion of such an
assessment or reassessment.
Unless the taxpayer is
conscious of his right, asserts
the same all in time, he
may have to face action on
invalid notices, though he
may ultimately succeed on
merits, but meanwhile put
on the rack unjustifiably and
inconsistently with law.
S. RAJARATNAM
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