2013 (5) TMI 448 - HC - Income Tax

Re opening of assessment - assessee contested as the reasons for reopening the assessment have not been provided at any time during the assessment proceedings and the same are brought to the knowledge only on receipt of the impugned order of assessment - Held that - There was no timely service of notice, dated 7.3.2013 about the hearing dated 14.3.2013 and due to over-sight, it was stated to have been despatched only on 16.3.2013 by the respondent, i.e. after the date of hearing, and therefore, there was denial of opportunity of hearing to the petitioner before passing the impugned order, resulting in violation of principles of natural justice. It requires under law that the assessee should be heard in the matter before concluding the proceedings and therefore, the authority is bound to afford an opportunity of hearing to the assessee in accordance with law, before proceeding to pass an order. Hence, the impugned order passed by the respondent cannot be sustained and the same is liable to be set aside and the matter should be remanded back to the respondent for fresh consideration.

Summary

Issues:
Challenge to order dated 20.3.2013 in PAN/GIR No.AABCG3714B for Assessment Year 2005-06.

Analysis:
The petitioner, a Real Estate Company, disputed an order by the respondent regarding the Assessment Year 2005-06, seeking to quash it. The petitioner's main argument was that no profits or income accrued from a property sale transaction funded by M/s. Wescare (India) Ltd., hence no tax liability existed. Despite maintaining complete documentation and following banking procedures, the petitioner received a notice of re-assessment under Section 148 of the I.T. Act, leading to a series of events including a notice under Section 143(2) for clarifications. However, due to errors in communication and timing, the petitioner was deprived of a fair opportunity to respond before the assessment was completed. The petitioner contended that the order was passed without granting a proper hearing, violating principles of natural justice and the provisions of the I.T. Act.

The respondent, on the other hand, argued that they issued a notice under Section 143(2) on 7.3.2013 for a hearing on 14.3.2013, but due to an oversight, the notice was dispatched late, leading to a delay in the petitioner's receipt of the notice. The respondent claimed that the mistake was unintentional. The Court noted that the delay in serving the notice denied the petitioner a fair opportunity to be heard before the assessment was concluded, which is a violation of natural justice. The authority is obligated to provide the assessee with a chance to present their case before making a decision. Therefore, the Court set aside the impugned order and remanded the matter back to the respondent for fresh consideration, emphasizing the importance of following due process and affording the petitioner a proper hearing as required by law.

In conclusion, the Court granted the Writ Petition, setting aside the impugned order and remanding the case for fresh consideration by the respondent. The Court highlighted the necessity of adhering to legal procedures, providing a fair opportunity of hearing to the petitioner, and ensuring compliance with the principles of natural justice.