2019 (6) TMI 1061 - HC - Income Tax

Reopening of assessment - writ petitioner had not filed returns or paid tax at any point of time - unexplained cash deposits - AO issued notice u/s 142(1) seeking production of evidences relating to the deposits made with the banks, but the same was unserved and returned with postal endorsement 'door locked' - HELD THAT - As already mentioned supra, the cash deposits made by the writ petitioner is not in dispute. Therefore, all that the writ petitioner can now explain to the respondent is that either his income is exempt from tax or that it was not the income received in one assessment year. The issues, as to whether the income is exempt from tax and as to whether he had earned it in one assessment year, have to be gone into. The predicament which the writ petitioner has undergone has been articulated in paragraph-3 of the writ affidavit and the same is not disputed. Court is of the view that as an exceptional case, one opportunity can be given to the writ petitioner - impugned assessment order made by the sole respondent dated 22.12.2018 is set aside without expressing any opinion on merits. It is also made clear that the order is being set aside only for the purpose of giving an opportunity to the writ petitioner to give his explanation

Summary

Issues:
- Assessment under Income Tax Act, 1961 for the assessment year 2011-2012.
- Non-filing of returns and tax payment by the individual petitioner.
- Cash deposits made by the petitioner in his savings bank account.
- Assessment order passed by the respondent.
- Failure of the petitioner to submit documents despite opportunities.
- Request for granting one more opportunity to the petitioner.
- Petitioner's explanation regarding cash deposits and taxable income.
- Petitioner's personal circumstances affecting his response to the notice.
- Scope for the petitioner to provide an explanation.
- Court's decision on setting aside the assessment order for giving the petitioner an opportunity.
- Directions given to the petitioner for appearing before the respondent with his Chartered Accountant.

Analysis:

The High Court judgment deals with an assessment under the Income Tax Act, 1961 for the assessment year 2011-2012. The petitioner, an individual running a small grocery shop, had not filed returns or paid tax despite making cash deposits in his bank account. The respondent initiated proceedings and passed an assessment order assessing the petitioner's income at a significant amount, demanding a substantial tax payment. The petitioner failed to provide any documents despite opportunities given, leading to the issuance of notices which were unserved. The petitioner, citing personal circumstances and lack of knowledge, requested another opportunity to explain the cash deposits and his taxable income.

The court acknowledged the petitioner's circumstances and decided to set aside the assessment order to grant the petitioner one more opportunity to explain his position. The court directed the petitioner to appear before the respondent with his Chartered Accountant on a specified date, emphasizing that no adjournments would be entertained. The respondent was instructed to redo the assessment and pass a fresh order within a specific timeframe. The court's decision aimed to provide a fair chance to the petitioner to present his case and have his income assessed properly. The judgment highlighted the importance of giving individuals a chance to clarify their financial situations, especially when faced with challenges that may have hindered their response to official notices.