GKN Driveshafts (India) Ltd v. ITO

Facts

• The ITO issued a notice under S.148 to GKN Driveshafts seeking to reopen assessment on grounds of income escaping assessment
• GKN Driveshafts wanted to challenge the validity of the reopening directly before the High Court via writ petition
• The question arose as to the correct procedure for challenging a S.148 notice

Issue

1. What is the proper procedure for an assessee to challenge a reassessment notice issued under S.148?

Held

• Upon receipt of S.148 notice, the assessee must file a return of income
• If the assessee objects to the reopening, they may request the AO to supply reasons recorded for issuing the notice
• The AO is bound to supply these reasons within a reasonable time
• Upon receipt of reasons, the assessee must file objections to the reopening
• The AO must dispose of the objections by passing a speaking order (giving reasons for accepting/rejecting objections)

Ratio Decidendi

The procedure for challenging a S.148 reassessment notice requires exhaustion of the statutory remedy before the AO. The assessee cannot directly approach the HC without first filing a return, obtaining reasons, raising objections, and receiving a speaking order from the AO. This ensures the AO applies his mind to the objections and the HC has a considered order to review.