2022 (5) TMI 1425 - HC - Income Tax

Reopening of assessment u/s 147 - addition u/s 68 - violation of the principles of natural justice - as alleged that no personal hearing was afforded to the petitioner before the impugned notice was issued - HELD THAT - Reply of the petitioner has been taken into consideration. The impugned notice also records that the books of accounts and some other details furnished by the petitioner were taken into consideration. The impugned notice also finds that on a perusal of the documents, it appears that there was no taxable income as per the copy of the Income Tax Return filed by the petitioner. The impugned notice records that in respect of the modus operandi, business, genuineness of the transaction and the creditworthiness of M/s. Winsome Commotrade Pvt. Ltd., there were lack of full-proof documents submitted by the petitioner in respect of the said entity. Accordingly, there was a need for cross-verification. There is no scope of interference with the impugned notice on the ground of violation of the principles of natural justice. The petitioner was issued two separate notices i.e. 22 March, 2022 and 5 April, 2022. The Reply of the petitioner has been dealt with in the impugned notice. The impugned notice records reasons. The impugned notice also records that due to lack of full proof documents submitted by the petitioner the modus operandi, the genuineness of transactions and the credit worthiness of M/s. Winsome Commotrade Pvt. Ltd. could not be substantiated. There is no illegality nor infirmity in the impugned notice. We lso find that the decision of VISHAL ASHWIN PATEL 2022 (3) TMI 1296 - SUPREME COURT is distinguishable. Similarly, the decision reported in Diya Capital Pvt. Ltd. Vs. Assistant Commissioner unreported decision 2022 (5) TMI 1016 - DELHI HIGH COURT is also inapposite in the facts of the instant case. In the said decision, the Hon ble Division Bench had arrived at a conclusive finding that the petitioner had not been given reasonable time to file a Reply. Accordingly, there is no scope of interfering with the impugned notice. The petitioner can always by participating in the re-assessment proceeding have the opportunity of taking all points available to the petitioner in accordance with law.

Summary

Issues:
1. Alleged violation of principles of natural justice in issuing notice under Section 148A of the Income Tax Act, 1961.
2. Allegation of lack of personal hearing and non-consideration of petitioner's Reply dated 9th April, 2022.
3. Claim of no taxable income based on Income Tax Return and lack of full-proof documents submitted by the petitioner regarding a transaction.

Analysis:
1. The petitioner challenged a notice under Section 148A of the Income Tax Act, 1961, alleging a violation of natural justice principles. The respondent authorities contended that the petitioner had opportunities to participate but chose not to. The respondent argued that the petitioner would have a chance to contest during re-assessment, thus no interference was warranted with the notice.

2. The impugned notice highlighted the petitioner's alleged involvement in a transaction with M/s. Winsome Commotrade Pvt. Ltd. The petitioner's Reply was considered, along with the submitted documents. It was noted that no taxable income was evident from the Income Tax Return, but the lack of comprehensive documents necessitated further verification regarding the transaction's genuineness and the entity's creditworthiness.

3. The judgment emphasized that the impugned notice adequately addressed the petitioner's contentions and reasons for re-assessment. The court found no illegality or infirmity in the notice and distinguished previous judgments where reasonable time for filing a Reply was a crucial factor. It was concluded that the petitioner could raise all points during the re-assessment process and dismissed the petition without costs.

Conclusion:
The High Court of Calcutta upheld the impugned notice under Section 148A of the Income Tax Act, 1961, rejecting claims of procedural violations and lack of consideration. The judgment emphasized the importance of participating in re-assessment proceedings to avail legal remedies. The petitioner's challenge was dismissed, and all parties were directed to act as per the court's order downloaded from the Official Website.