2018 (3) TMI 228 - HC - Income Tax

Reopening of assessment - proof of providing sufficient opportunities to the petitioner - unexplained investment under Section 69 - Held that - By letter dated 24.11.2017, the petitioner was asked to show cause why the agricultural income of ₹ 1.6 crores should not be assessed to tax as income from other sources, investment in immovable properties for ₹ 33 lakhs be assessed as unexplained investment under Section 69 for failure to prove the source of purchase and cash deposit of ₹ 23.54 lakhs be assessed as unexplained cash u/s 68. The hearing was fixed on 29.11.2017 and on that day also, there was no response on the side of the petitioner. By letter dated 01.12.2017, the respondent called upon the petitioner to produce additional details and the case was posted on 05.12.2017. On 05.12.2017, the petitioner sought time till 11.12.2017. Thereafter, the case was adjourned to 08.12.2017. Again the case was adjourned to 18.12.2017 and even on that day, there was no response from the petitioner. Hence, the respondent had passed the assessment order on 19.12.2017 and despatched the same to the petitioner. Therefore, from the above details given by the respondent, it is clear that the respondent had given sufficient opportunities to the petitioner. However, the petitioner had failed to utilize those opportunities and produce the documents before the respondent. Therefore, the contention that the petitioner was not given due opportunity, cannot be accepted. On the other ground that furnishing the reasons for reopening the assessment is concerned, though the petitioner has sought for the reasons for reopening the assessment on 12.12.2017, the Assessing Officer has not furnished the reasons recorded for reopening the assessment to the petitioner. In fact, the petitioner had stated that her letter requesting the reasons recorded for reopening the assessment itself was refused, therefore, the petitioner sent the letter by Speed Post and E-mail to the respondent. Inspite of the same, the respondent had not furnished the reasons recorded for reopening the assessment to the petitioner. The respondent is directed to consider the request of the petitioner for furnishing the reasons recorded for reopening the assessment for the year 2013-14 within a period of fifteen (15) days from the date of receipt of a copy of this order

Summary

Issues Involved:
1. Validity of the reassessment proceedings under Section 148 of the Income Tax Act.
2. Compliance with the principles of natural justice.
3. Requirement to furnish reasons for reopening the assessment.

Issue-wise Detailed Analysis:

1. Validity of the reassessment proceedings under Section 148 of the Income Tax Act:
The petitioner filed a return of income for the Assessment Year 2013-14 on 30.12.2014, declaring a total income of ?10,94,980 and net agricultural income of ?1,60,00,000. The respondent issued a notice under Section 148 on 08.06.2016, within four years from the end of the Assessment Year, for reopening the assessment, stating that there were reasons to believe that the income chargeable to tax had escaped assessment. The respondent followed up with notices under Sections 143(2) and 142(1) for further details. Despite several opportunities provided by the respondent, the petitioner failed to furnish the required documents timely. The reassessment order was passed on 19.12.2017, which the respondent claimed was valid as it was within the permissible period and no regular assessment under Section 143(3) had been made.

2. Compliance with the principles of natural justice:
The petitioner argued that the impugned order dated 19.12.2017 violated the principles of natural justice as she was not given due opportunity to produce the documents. The respondent countered that sufficient opportunities were given, but the petitioner did not utilize them. The court noted that the petitioner was given multiple chances to submit the required documents and appear before the respondent, but failed to do so. Therefore, the contention that the petitioner was not given due opportunity was not accepted.

3. Requirement to furnish reasons for reopening the assessment:
The petitioner requested the reasons for reopening the assessment on 12.12.2017, but the Assessing Officer did not furnish these reasons. The court referenced the Supreme Court's mandate in GKM Drivershafts (India) Ltd. Vs. ITO, which requires the Assessing Officer to provide the reasons for reopening the assessment when requested by the assessee. The court found that the respondent’s failure to furnish the reasons recorded for reopening the assessment to the petitioner was a significant procedural lapse.

Conclusion:
The court set aside the impugned assessment order dated 19.12.2017 on the ground that the reasons for reopening the assessment were not furnished to the petitioner. The respondent was directed to provide the reasons within 15 days of receiving a copy of the court's order. The petitioner was then instructed to file her objections/reply within 30 days of receiving the reasons, after which the respondent should reconsider and redo the assessment in compliance with the Supreme Court's mandate in GKM Drivershafts (India) Ltd. Vs. ITO. The writ petition was allowed, and no costs were imposed.