Reassessment: Reopening at the instance of audit party – Sections 147 and 148 – A. Y. 2009- 10 – AO contested the audit objection but still reopened the assessment – Reopening is at the instance of the audit party – AO has not applied mind independently – Reopening is bad in law:

For the A. Y. 2009-10, the assessment of the assessee petitioner was completed by an order u/s. 143(3) of the Income-tax Act, 1961 dated 24-12-2010. Subsequently, a notice u/s. 148 dated 11-03-2013 was issued for reopening the assessment. The assessee’s objections were rejected.

On a writ petition filed by the assessee challenging the notice u/s. 148, the Gujarat High Court found that the audit party had raised objections as regards the issue in question but the Assessing Officer had contested the audit objections and supported the assessment order. The High Court allowed the writ petition filed by the assessee and held as under:

“i)To satisfy ourselves, whether the reassessment proceedings have been initiated at the instance of the audit party and solely on the ground of audit objections, we called upon the Advocate for the Respondent to provide the original file from the Assessing Officer. On perusal of the files, the noting made therein and the relevant documents, it appears that the assessment is sought to be reopened at the instance of the audit party, solely on the ground of audit objections.

ii) It is also found that, as such, the Assessing Officer tried to sustain his original assessment order and submitted to the audit party to drop the audit objections.

iii) If the reassessment proceedings are initiated merely and solely at the instance of the audit party and when the Assessing Officer tried to justify the assessment order and requested the audit party to drop the objections and there was no independent application of mind by the Assessing Officer with respect to the subjective satisfaction for initiation of reassessment proceedings, the impugned reassessment proceedings cannot be sustained and the same deserve to be quashed and set aside.

iv) Present petition succeeds on the aforesaid ground alone, i.e., the assessment was reopened solely on the ground of audit objections raised by the audit party. Consequently, the impugned reassessment proceedings are hereby quashed and set aside.”