2020 (8) TMI 154 - HC - Income Tax

Reopening of assessment u/s 147 - petitioner has not filed a return of income in pursuance to notice under Section 148 of the Act, as it is statutorily required to - HELD THAT - It is incumbent upon the assessee to file a return of income in response to a notice under section 148 or to state that the return filed earlier should be taken to have been filed in compliance to the notice. The petitioner has done neither. Also not inclined to accept the explanation offered now in this regard, to the effect that the mismatch in PAN would have stood in the way of the return being accepted online, as it does not figure either in the correspondence inter se the petitioner and the Department or in the affidavit filed in support of the writ petition, and is made only orally and thus believe that the same is an afterthought. This Court sitting under Article 226 of the Constitution of India is not expected to resolve factual issues and errors arising out of multiplicity of PANs, particularly when the assessee/petitioner had admittedly applied for and obtained separate PAN numbers voluntarily. There is thus every possibility that the multiplicity of PANs has given rise to the confusion/error, if any, in the case. We are inclined to relegate the petitioner to statutory appeal. Since the petitioner expresses apprehension that on account of technical glitches, he would be unable to file the appeal, the petitioner is permitted to file an appeal manually and such appeal, if filed within a period of four (4) weeks from today, will be accepted by the Officer of the Commissioner of Income Tax (Appeals) holding jurisdiction in the matter.

Summary

Issues:
1. Challenge to re-assessment order for AY 2012-13 under the Income Tax Act, 1961.
2. Misquoting of PAN number in the notice under Section 148.
3. Alleged errors in computation of interest income and violation of natural justice principles.
4. Failure to file a return of income in response to the notice under Section 148.
5. Proper procedure for re-assessments as per the Supreme Court's guidelines.

Issue 1: Challenge to re-assessment order for AY 2012-13 under the Income Tax Act, 1961
The petitioner challenged the re-assessment order dated 30.12.2019 for AY 2012-13 under the Income Tax Act, 1961. The primary argument raised was regarding the notice under Section 148 misquoting the PAN number of the assessee, which was deemed to vitiate the basis of the re-assessment proceedings. Additionally, the petitioner disputed the existence of bank accounts and interest income, highlighting the lack of supporting details provided by the assessing officer. The discrepancy between the proposed addition in the show cause notice and the actual amount taxed, along with alleged non-credit for tax deducted at source, were also contested.

Issue 2: Misquoting of PAN number in the notice under Section 148
The counsel for the petitioner emphasized the incorrect PAN number (AABCE8131A) mentioned in the notice under Section 148, which was meant for 'M/s. Elektronik Lab India Private Limited', whereas the correct PAN for the petitioner was AADCE2492E. The petitioner's director and individual PAN holder also had separate PANs. The failure to rectify this discrepancy immediately upon receiving the notice was noted, and the explanation offered later was considered an afterthought by the court.

Issue 3: Alleged errors in computation of interest income and violation of natural justice principles
The petitioner raised concerns about errors in the computation of interest income from bank deposits and the lack of supporting documentation provided by the assessing officer. The violation of principles of natural justice was alleged due to discrepancies in the proposed addition in the show cause notice and the final amount taxed, as well as the non-credit for tax deducted at source. The court noted these arguments alongside the challenge to the re-assessment order.

Issue 4: Failure to file a return of income in response to the notice under Section 148
The petitioner failed to file a return of income in response to the notice under Section 148, citing a mismatch in PAN numbers as a reason. However, the court found this explanation insufficient, especially since it was not raised before the assessing officer promptly. The court highlighted the statutory requirement for the assessee to file a return of income in response to such notices, which the petitioner failed to comply with.

Issue 5: Proper procedure for re-assessments as per the Supreme Court's guidelines
The court referenced the Supreme Court's guidelines in GKN Driveshafts (India) Ltd. v. Income Tax Officer, emphasizing the importance of following proper procedures in re-assessments. It reiterated the necessity for the assessee to file a return of income or state compliance with the earlier filing in response to the notice under Section 148. The court directed the petitioner to pursue statutory appeal, permitting manual filing due to technical concerns, and ordered a stay on recovery of the disputed demand until the appeal's disposal by the Commissioner of Income Tax (Appeals).

In conclusion, the High Court upheld the re-assessment order for AY 2012-13 but directed the petitioner to pursue statutory appeal following proper procedures. The court emphasized the importance of compliance with statutory requirements and the necessity for providing accurate information during tax proceedings.