2022 (2) TMI 285 - HC - Income Tax

Assessment u/s 143(3) read with Section 144B - Request of adjournment rejected - no fair opportunity to the petitioner to file reply - HELD THAT - As notice under Section 142(1) of the Income Tax Act, 1961 has been issued to the erstwhile defunct firm, namely, Anand Cine Services, it is based on the PAN, no serious objections can be raised as far as the issue of notice in the name of erstwhile defunct firm is concerned inasmuch as the assets and liabilities of the said defunct firm were taken over by the petitioner. As the copy of the documents to assess the income would require for the detailed consideration by the Assessing Authority, reply ought to have been filed by the petitioner in response to the Show Cause Notice dated 21.09.2021 by 24.09.2021. Since the time granted for reply by 24.09.2021 has expired, the impugned order has been passed. Assessment Order was passed without giving a fair opportunity to the petitioner to file reply, the impugned Assessment Order dated 27.09.2021 is liable to be quashed and the case is liable to be remitted back to the first respondent for passing a fresh order, within a period of sixty (60) days from the date of receipt of a copy of this order. Needless to state, before passing such order, the petitioner shall be heard through Video Conferencing. Liberty is therefore given to the petitioner to file reply within a period of thirty (30) days from the date of receipt of a copy of this order. The petitioner is also entitled to file suitable applications / representations along with the relevant documents which may be considered by the respondent in accordance with provisions of the Income Tax Act, 1961 and the Income Tax Rules, 1962 before passing order.

Summary

Issues:
Challenge to Assessment Order under Income Tax Act, 1961 for Assessment Year 2018-2019 based on Show Cause Notice and revised return filed by petitioner. Validity of Assessment Order due to business takeover and existence of defunct partnership firm. Compliance with notice requirements and fair opportunity for petitioner to respond.

Analysis:
The petitioner challenged the Assessment Order dated 27.09.2021 under Section 143(3) read with Section 144B of the Income Tax Act, 1961 for the Assessment Year 2018-2019. The impugned order followed a Show Cause Notice dated 21.09.2021, which included a Draft Assessment Order and requested a response by 24.09.2021. The petitioner sought an adjournment, which was rejected due to time constraints. The petitioner had taken over a partnership concern, Anand Cine Services, and filed a revised return in their name. The respondents argued that the Assessment Order was valid as it pertained to the relevant Assessment Year and the business takeover did not negate the assessment based on PAN details.

The petitioner contended that the Assessment Order was not valid as the partnership firm no longer existed, and the revised return was filed in the petitioner's name. Reference was made to a Supreme Court decision in a similar context. The respondents maintained that the assessment was justified, given the business transfer and notices issued to the defunct partnership firm. The Court noted that the notice issued to the defunct firm was based on PAN and upheld its validity. However, it found that the petitioner was not given a fair opportunity to respond to the Show Cause Notice, leading to the quashing of the Assessment Order.

The Court directed the case to be remitted back for a fresh order within sixty days, with the petitioner to be heard through Video Conferencing. The petitioner was granted thirty days to file a reply and submit relevant documents for consideration. Instructions were given to facilitate the petitioner in uploading necessary information on the ITBA Portal. The judgment concluded by disposing of the Writ Petition with no costs, and related Miscellaneous Petitions were closed. The decision emphasized the importance of providing a fair opportunity for the petitioner to respond to assessment proceedings under the Income Tax Act, 1961.