2022 (1) TMI 428 - HC - Income Tax

Demand order based on the information gathered by the Income Tax Department from the import-export data received from Central Board of Excise and Customs (CBEC) - No appropriate notice as is contemplated under Section 144B - HELD THAT - Though according to the petitioner, the petitioner has received only a sum of ₹ 28,96,112/- as income from duty drawback before concluding that the petitioner had received a total duty drawback amounting to ₹ 1,03,73,667/- for the Assessment Year 2018-2019 (Financial Year 2017-2018), the petitioner should have been put to notice as it is the categorical stand of the petitioner that the petitioner has received an income of ₹ 28,96,112/- only as duty drawback on the export goods. Therefore, the impugned order is set aside and the case is remitted back to the respondents to pass a speaking order on merits and in accordance with law within a period of forty five days from the date of receipt of copy of this order. Since the matter is remitted back to the respondents, the respondents are directed to issue appropriate notice as is contemplated under Section 144B of the Income Tax Act, 1961 within a period of thirty days from the date of receipt of a copy of this order. The petitioner shall thereafter file a reply within a period of fifteen days from the date of receipt of the Show Cause Notice whichever is earlier.

Summary

Issues:
1. Impugned order demanding Income Tax based on import-export data.
2. Discrepancy in duty drawback amount received by the petitioner.
3. Lack of notice to petitioner before confirming the tax demand.
4. Setting aside the impugned order and remitting the case back to respondents.
5. Directions for issuing notice under Section 144B of the Income Tax Act.

Analysis:
The High Court of Madras, in this judgment delivered by Mr. Justice C. Saravanan, addressed various crucial issues. Firstly, the court noted that the impugned order sought to demand Income Tax amounting to ?74,77,555, based on information from the import-export data received from CBEC. However, a significant discrepancy was highlighted by the petitioner, who claimed to have received only ?28,96,112 as income from duty drawback, contrary to the total amount considered for the Assessment Year 2018-2019. The court emphasized that the petitioner should have been given notice before concluding on the tax demand, especially considering the petitioner's assertion regarding the actual income received.

Consequently, the court set aside the impugned order and remitted the case back to the respondents for a fresh determination. The respondents were directed to pass a speaking order on merits and in accordance with the law within forty-five days from the receipt of the court's order. Additionally, in light of the remittance, the respondents were instructed to issue a notice under Section 144B of the Income Tax Act within thirty days, with the petitioner required to respond within fifteen days of receiving the Show Cause Notice, whichever is earlier. The court emphasized that all issues should be decided by the respondents based on the notice issued to the petitioner.

In conclusion, the Writ Petition was disposed of with the outlined observations, and the connected Writ Miscellaneous Petitions were closed without any order as to costs. The judgment reflects a meticulous consideration of the discrepancies in the tax demand, the necessity of providing notice to the concerned party, and the procedural steps to be followed by the respondents in re-evaluating the case.