2021 (7) TMI 427 - HC - Income Tax

Assessment u/s 143(3) - petitioner claims that, it was unable to respond to the aforementioned show cause notice as the e-filing portal, maintained by the revenue, was not functional - HELD THAT - As given the fact that, the timeframe set out in the show cause notice dated 11.06.2021 was extremely narrow, and that the e-filing portal was dysfunctional these are good enough reasons for us, to set aside the impugned assessment order, with liberty to the AO to continue the assessment proceedings from the stage at which they were positioned when the show cause notice dated 11.06.2021 was issued. It is ordered accordingly. The respondent/revenue will be at liberty to call for further information, if thought necessary, before proceeding to frame the assessment order. In particular, the petitioner will furnish the FIRC concerning GMO, which is presently not on record. The petitioner will render assistance in every form to the respondent/revenue in passing the fresh assessment order. The statement of Mr. Chopra is taken on record.

Summary

Issues:
Challenge to assessment order, notice of demand, penalty proceedings under Income Tax Act, 1961 for AY 2017-2018.

Analysis:
The petitioner filed a return showing a loss for AY 2017-2018, which was picked for scrutiny. The petitioner claims timely responses to information requests during assessment proceedings. However, a show cause notice dated 11.06.2021 raised concerns about foreign remittances and demanded responses by 14.06.2021. The petitioner cited e-filing portal issues hindering a reply. The assessment order added a portion of investments as unexplained income under Section 68, resulting in a significant tax demand. The petitioner argued that the short response time and portal malfunction infringed its rights. Additionally, the petitioner contended that the AO failed to adjust the addition against the declared loss.

The respondent argued that despite multiple information requests, some details, like FIRC for a specific investment, were not provided. The petitioner's counsel assured that pending information could be submitted. The court noted the narrow response timeframe and portal issues as valid reasons to set aside the assessment order. The AO was directed to continue proceedings from the stage of the show cause notice, with liberty to request additional information, including the missing FIRC. The petitioner committed full cooperation for the fresh assessment order.

The court disposed of the writ petition and application, ensuring the fresh assessment order would not be impacted by the observations. The judgment emphasized fair assessment proceedings and cooperation between the petitioner and revenue authorities for a comprehensive evaluation.