The Madras High Court, on Thursday, quashed a communication issued by the income tax department rejecting the objections raised by the assessee to the re-opening of assessment for want of compliance with section 148A of the Income Tax Act, 1961 and has directed the income tax department to follow the recent judgment of the Supreme Court in Union of India -vs- Ashish Agarwal.
The petitioner, Giant Construction Company challenged the communication dated 21.04.2022 by which the objections raised by the petitioner to the reopening of the assessment were rejected. The petitioner contended that the impugned communication is in contravention of the amended Section 148-A of the Income Tax Act, 1961. According to the petitioner, upon the insertion of Section 148-A, an inquiry should be conducted, if required, and even otherwise all the materials and reasons for reopening the assessment should be provided to the petitioner along with an opportunity to respond to the same. The communication is impugned on the ground that these requirements were not complied with.
Justice Senthilkumar Ramamoorthy referred the recent Supreme Court decision wherein the Supreme Court has saved around 90,000 re-assessments by deeming compliance of section 148A of the Income Tax Act, 1961.
Citing the SC ruling, the Court held that “In view of the settled legal position, the impugned communication is quashed and the matter is remanded for further proceedings in accordance with paragraphs 26 and 27 of the Judgment in Union of India -vs- Ashish Agarwal cited supra.”
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