2022 (5) TMI 526 - HC - Income Tax

Validity of reopening of assessment u/s 147 - argument of non serving of SCN - violation of principles of natural justice - HELD THAT - Insofar as the show cause notice issued by the Revenue dated 03.03.2022 is concerned, according to the petitioner's counsel, the same has not been served on him and that notice as well as the subsequent assessment order since has been uploaded in the website, which the petitioner was able to retrieve only on 22.03.2022, the petitioner's counsel contended that, there was no chance for the petitioner to reply to the show cause notice. Therefore, if one chance is given to him, certainly the petitioner assessee would reply to the show cause notice and face the assessment. As this Court feels that the impugned order can be set aside and the matter can be remitted back to the respondents with a direction to the respondents to give one more opportunity to respond to the show cause notice dated 03.03.202 - The impugned order dated 11.03.2022 is set aside and the matter is remitted back to the respondents for reconsideration.

Issues:
1. Validity of the notice issued under Section 148 of the Income Tax Act 1961 for Assessment Year 2017-18.
2. Allegation of violation of principles of natural justice due to failure to serve show cause notice and subsequent assessment order.
3. Request for setting aside the impugned order and remitting the matter back to the respondents for reconsideration.
4. Direction for the assessee to respond to the show cause notice dated 03.03.2022 within two weeks.

Analysis:
1. The petitioner did not file the return for Assessment Year 2017-18, prompting the Revenue to issue a notice under Section 148 of the Income Tax Act 1961. The petitioner received the notice on 04.02.2022. Subsequently, the petitioner claimed that apart from the impugned assessment order dated 11.03.2022, no other notice was served, which the petitioner only noticed on 22.03.2022 through the web portal.

2. The petitioner argued that the show cause notice issued on 03.03.2022 was not physically served, and the subsequent assessment order was only viewable on the website after 22.03.2022. The petitioner contended that this lack of physical notice deprived them of the opportunity to respond. The petitioner requested to treat the show cause notice as a fresh one, allowing them to reply within a reasonable time.

3. The Court considered the submissions from both sides and found merit in the petitioner's argument regarding the lack of opportunity to respond to the show cause notice. Therefore, the Court set aside the impugned order dated 11.03.2022 and directed the matter to be reconsidered by the respondents. The Court instructed the assessee to treat the show cause notice dated 03.03.2022 as fresh and respond within two weeks from receiving a copy of the order.

4. The Court ordered the Revenue to open the portal for the assessee to respond and further communicate through the web portal if any additional notices or opportunities were required. The Court emphasized providing the assessee with a fair chance to reply and participate in the assessment process, ensuring compliance with principles of natural justice.

This judgment underscores the importance of adherence to procedural fairness and the right of the assessee to be heard in tax assessment proceedings, highlighting the significance of proper notice and opportunity to respond in line with principles of natural justice.

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