Business

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.

© Copyright 2000 - 2009 The Hindu