Case Note & Summary
The petitioner, Shree Madhi Vibhag Khand Udyog Sahakari Mandli Limited, a cooperative society, filed a writ petition under Article 226 of the Constitution of India before the Gujarat High Court challenging the reassessment order dated 21.03.2025 passed by the Assessment Unit, Income Tax Department (respondent No.1) under Section 147 read with Section 144B of the Income Tax Act, 1961, along with the demand notice under Section 156 and penalty notice under Section 270A of the Act. The petitioner had received a Show Cause Notice dated 18.02.2025 proposing reassessment. In response, the petitioner submitted a detailed reply dated 24.02.2025, placing reliance on the Supreme Court judgment in M/s.Totgars' Cooperative Sale Society Ltd. Vs. Income Tax Officer, (2010) 322 ITR 283 (SC) and the Gujarat High Court judgment in Pr. CIT Vs. Ashivn Kumar Arban Co-operative Society Ltd., (2024) 168 Taxmann.com 314 (Guj), which held that cooperative societies are entitled to deduction under Section 80P of the Act. Despite these binding precedents, the Assessing Officer passed the impugned assessment order without considering or distinguishing them. The petitioner argued that the Assessing Officer acted in defiance of judicial discipline and with non-application of mind. The court, after hearing the parties, found that the Assessing Officer had completely ignored the binding decisions cited by the petitioner. The court held that failure to consider binding precedents amounts to non-application of mind and renders the assessment order unsustainable. Consequently, the court quashed the reassessment order, demand notice, and penalty notice, and allowed the writ petition with no order as to costs.
Headnote
A) Income Tax - Reassessment - Section 147, 144B, 80P Income Tax Act, 1961 - Non-application of mind - Petitioner cooperative society challenged reassessment order and demand notice - Assessing Officer ignored binding decisions of Supreme Court in M/s.Totgars' Cooperative Sale Society Ltd. Vs. Income Tax Officer and Gujarat High Court in Pr. CIT Vs. Ashivn Kumar Arban Co-operative Society Ltd. - Held that failure to consider binding precedent amounts to non-application of mind and vitiates the assessment order (Paras 1-5).
Issue of Consideration
Whether the reassessment order passed under Section 147 read with Section 144B of the Income Tax Act, 1961, is valid when the Assessing Officer ignored binding judicial precedents on the issue of deduction under Section 80P of the Act.
Final Decision
The court allowed the writ petition and quashed the reassessment order dated 21.03.2025, the demand notice under Section 156, and the penalty notice under Section 270A. Rule made absolute. No order as to costs.
Law Points
- Reassessment under Section 147 must be based on tangible material
- Assessing Officer must consider binding precedents
- Deduction under Section 80P available to cooperative societies
- Non-application of mind vitiates assessment order
