2022 (6) TMI 245 - HC - Income Tax

Reopening of assessment u/s 147 - notice u/s 148A(d) - application for adjournment was filed by the petitioner seeking extension of time to file a reply to the said notice - HELD THAT - Having heard learned counsel for the parties, this Court is of the view that the petitioner/assessee has the right to get adequate time in accordance with the Act to submit its reply. It is pertinent to mention that Section 148A(b) permits the Assessing Officer to suo moto provide up to thirty day s period to an assessee to respond to the show cause notice issued under Section 148A(b), which period may in fact be further extended upon an application made by the Assessee in this behalf, and such period given to the petitioner-assessee is excluded in computing the period of limitation for issuance of notice under Section 148A(d) of the Act in terms of the third proviso to Section 149 of the Act. In the present case, though the petitioner had filed an application for adjournment immediately after receipt of notice dated 17th March, 2022, the respondent had neither rejected the request for adjournment nor directed the petitioner to file a reply within the original stipulated time. By denying an opportunity of adequate time to the petitioner, the mandate of Section 148A(b) has been violated.Consequently, the impugned order dated 31st March, 2022 issued under Section 148A(d) of the Act and the notice dated 31st March, 2022 issued under Section 148 of the Act are set aside.

Summary

Issues:
Challenge to order under Section 148A(d) of the Income Tax Act, 1961 and notice issued under Section 148 for Assessment Year 2018-19.

Analysis:
The petitioner challenged an order and notice issued under the Income Tax Act, 1961. The petitioner argued that despite filing an application for adjournment due to statutory compliances and collating financial records, the respondent passed an order erroneously stating the reply was devoid of merit. The petitioner contended that this violated principles of natural justice.

The Court noted that the petitioner has the right to adequate time to respond under Section 148A(b) of the Act. The Assessing Officer can provide up to thirty days for a response, extendable upon application by the assessee. The time given to the petitioner is excluded in computing the limitation for notice issuance under Section 148A(d).

Although the petitioner filed an adjournment application promptly, the respondent neither rejected nor directed a reply within the original stipulated time. This was deemed a violation of Section 148A(b). Citing a previous case, the Court emphasized the importance of providing adequate time for response.

Consequently, the impugned order and notice were set aside. The petitioner was directed to file a reply within two weeks, and the respondent was instructed to open the e-portal for uploading. The Assessing Officer could issue a supplementary notice for clarification. A reasoned order was to be passed within eight weeks, without commenting on the merits of the controversy, leaving all rights and contentions open.

With these directions, the writ petition and pending applications were disposed of.