2022 (5) TMI 1435 - HC - Income Tax

Reopening of assessment u/s 147 - Validity of notice issued under Section 148A(d) - Petitioner states that the Petitioner was granted only three days time to file its response to the notice - HELD THAT - This Court is of the view that under Section 148A(b) of the Act, a minimum time of seven days has to be granted to the assessee to file its reply to the said show cause notice. In the present case, though the petitioner responded to the show cause notice, yet it could not provide all the relevant details and documents, as the time period of three days to respond to the show cause notice was inadequate. Consequently, this Court is of the view that in the present case not only there has been a violation of the mandatory time period stipulated under Section 148A(b) of the Act, but grave prejudice has been caused to the petitioner. Accordingly, the impugned order dated 6th April, 2022 under Section 148A(d) and notice under Section 148 of the Act are quashed. If the law permits the respondent/revenue to take further steps in the matter, it shall be at liberty to do so. Needless to state that if and when such steps are taken and if the petitioner has a grievance, it shall be at liberty to take its remedies in accordance with law.

Summary

Issues:
Challenging Notice under Section 148A(b) of the Income Tax Act, 1961, rejection of reply under Section 148A(d), inadequate time granted to file response.

Analysis:
The petitioner challenged a Notice dated 22nd March, 2022, issued under Section 148A(b) of the Income Tax Act, 1961, along with a consequential order dated 06th April, 2022 issued under Section 148A(d) and another notice issued under Section 148 of the Act dated 7th April, 2022. The Respondent alleged that the petitioner made cash deposits without filing Income Tax Returns. The petitioner responded by explaining that the cash deposits were received from society members, supported by proper receipts and audit records. However, the Respondent rejected the reply under Section 148A(d) for not providing a list of members who deposited cash. The petitioner argued that the three-day response time was insufficient to compile the list, violating the mandatory seven-day period under Section 148A(b) and causing prejudice.

The Court noted that Section 148A(b) mandates a minimum seven-day period for the assessee to respond to a show cause notice. In this case, the petitioner could not provide all relevant details within the inadequate three-day period, leading to a violation of the statutory time limit and causing significant prejudice. Consequently, the Court quashed the impugned order dated 6th April, 2022 under Section 148A(d) and the notice under Section 148 of the Act. The respondent/revenue was granted liberty to take further steps if permitted by law, with the petitioner retaining the right to seek remedies in accordance with the law. The writ petition was disposed of with this direction.