2022 (4) TMI 1085 - HC - Income Tax

Reopening of assessment u/s 147 - petitioner was not given adequate opportunity to file response to the said show cause notice-cum-draft assessment order - show cause notice-cum-draft assessment order was only placed on the portal but was not intimated to the petitioner - HELD THAT - This Court is of the view that the impugned show cause notice-cum-draft assessment order has been issued within limitation as the same was admittedly dispatched on 31 st March, 2022 at 11.36 PM. Consequently, the petitioner is not entitled to benefit of judgement of this Court in Mon Mohan Kohli 2021 (12) TMI 664 - DELHI HIGH COURT This Court is of the view that there has been a violation of principle of natural justice as detailed objections filed by the petitioner vide reply dated 14th March, 2022 were not decided prior to issuance of show cause notice-cum-draft assessment order dated 30th March, 2022. This Court is also of the view that the petitioner was not given adequate opportunity to file response to the said show cause notice-cum-draft assessment order. Consequently, as there has been a violation of principle of natural justice, the impugned assessment order and demand notice dated 31st March, 2022 are set aside and the matter is remanded back to respondent no.2/NFAC, who is directed to decide the objections filed by the petitioner dated 14th March, 2022 in accordance with law, at the first instance. In the event, respondent no.2/NFAC does not find any merit in the objections filed by the petitioner, then it shall proceed further in the matter in accordance with law and pass appropriate orders.

Summary

Issues involved:
Challenging reassessment notice under Section 148 of the Income Tax Act, 1961 for the assessment year 2016-17; validity of notice issuance date; respondent's notice seeking clarifications with a blank annexure; consideration of objections in passing assessment order; violation of natural justice in issuing show cause notice-cum-draft assessment order; adequacy of opportunity to respond to the show cause notice.

Analysis:
The petitioner challenged the reassessment notice dated 31st March, 2021, issued under Section 148 of the Income Tax Act, 1961, for the assessment year 2016-17, along with the assessment order dated 31st March, 2022. The petitioner argued that despite the notice being dated 31st March, 2021, and emailed at 11:36 PM on the same day, it should be considered served on 1st April, 2021, citing a relevant court decision. Additionally, the petitioner highlighted issues with a notice dated 28th November, 2021, which lacked a proper annexure for response, and that their objections raised in a reply dated 14th March, 2022, were not considered in the assessment order.

The petitioner further contended that a show cause notice-cum-draft assessment order dated 30th March, 2022, was issued in violation of natural justice principles, as it was made available on the Income Tax Portal with a short response time, without direct intimation to the petitioner. The respondent argued that despite providing multiple opportunities, the petitioner responded only at the last moment. The Court acknowledged that the show cause notice-cum-draft assessment order was dispatched within the limitation period, denying the petitioner the benefit of a previous court judgment.

However, the Court found a violation of natural justice as the detailed objections filed by the petitioner were not addressed before issuing the show cause notice-cum-draft assessment order. It also noted that the petitioner was not given adequate time to respond to the notice. Consequently, the Court set aside the assessment order and demand notice, remanding the matter back to the respondent to consider the objections in accordance with the law. The Court clarified that it did not comment on the merit of the controversy, leaving the rights and contentions of all parties open. The writ petition and pending applications were disposed of with these directions.