2022 (8) TMI 53 - HC - Income Tax

Validity of Reopening of assessment u/s 147 - notice u/s 148A - Denial of natural justice - period shall be not less than 7 days and but not exceeding 30 days from the date on which such notice was issued together with a power to grant further time on an application made by the assessee - As argued adequate opportunity has not been granted to the appellant though the statute specifies that minimum 7 days time should be granted to the assessee to respond and the assessee should be heard in the matter - reasonable opportunity was not being granted to the appellant - HELD THAT - As rightly pointed by the learned senior Advocate for the appellant that nowhere in the reply given by the assessee, there is any elaborate discussion about Section 148, 148A of the Act and probably there occurred a factual mistake at the hands of the Assessing Officer. The assessee had enclosed certain documents along with the reply and had made submissions on merit and on our reading, we find that no elaborate discussion about Section 148 or 148A of the Act. Be that as it may, the opportunity of hearing to be provided should be reasonable and not illusory. If the appellant had received the show cause notice on 17th March, 2022 online, then for calculating the period of 7 days, namely 17th March, 2022 has to be excluded. If that is so, the period of 7 clear days does not stand fulfilled in the case on hand. Apart from that, 18th March, 2022, 19th March, 2022 and 20th March, 2022 are to be excluded since they are all holidays on account of Holi festival.Further, we state that the State of West Bengal had declared 17th March, 2022 also as a holiday though for the Central Government, no such holiday was declared and an identical issue was considered by us in the case M/s. R. N. Fashion 2022 (6) TMI 84 - CALCUTTA HIGH COURT We are of the view that the assessee should be granted an opportunity by the Assessing Officer in terms of Clause (b) of Section 148A of the Act, which provides for an opportunity of being heard to the assessee. For such reason, we are inclined to remand the matter back to the Assessing Officer for fresh consideration. The notice issued under Section 148 of the Act dated 29th March, 2022 shall not be enforced and a fresh action can be initiated in accordance with law after complying with the following direction. The appellant shall submit a fresh reply within two weeks from the date of receipt of the server copy of this judgment and order and upload the reply online and the appellant is at liberty to also refer to the order dated 29th March, 2022 under Section 148A (b) of the Act and also give his reply. On receipt of the said reply, the authorised representative of the appellant shall be given an opportunity of personal hearing through video conferencing and the documents that the assesee may produce shall also be considered and fresh order under Clause (d) of Section 148A of the Act be passed in accordance with with law. The appellant has requested for copies of certain documents. The Assessing Officer before affording an opportunity of hearing shall take note of the said representation and take a decision on merits and in accordance with law and thereafter proceed further in terms of the directions.

Summary

Issues:
Challenge to notice under Section 148A(b) of the Income Tax Act, 1961 for inadequate opportunity granted to the appellant.

Analysis:
The appellant challenged a notice issued under Section 148A(b) of the Income Tax Act, 1961, contending that the minimum required time of 7 days for response was not granted. The appellant submitted a reply on 23rd March, 2022, highlighting the lack of adequate notice and requesting details of the enquiry conducted by the department. The Assessing Officer passed an order on 29th March, 2022, noting that the appellant's reply lacked specific answers and focused on the effect of Section 148 and 148A of the Act. The High Court reviewed the reply and found it to be focused on merits, with enclosures such as bank statements provided to support the remittances made through proper channels.

Analysis:
The Court examined the statutory provision of Section 148A(b) of the Act, which mandates the Assessing Officer to provide a minimum of 7 days for the assessee to respond. The notice in this case was received online on 17th March, 2022, which was followed by a state holiday and other non-working days, leading to inadequate time for the appellant to respond adequately. The Court emphasized that the opportunity given to the appellant should be reasonable and not illusory, considering the holidays and the necessity for a proper timeframe for response.

Analysis:
The Court concluded that the appellant should be granted a fresh opportunity by the Assessing Officer in accordance with the provisions of Clause (b) of Section 148A of the Act. The matter was remanded back to the Assessing Officer for reconsideration, directing the appellant to submit a fresh reply within two weeks. The appellant was granted a personal hearing through video conferencing, and any documents produced by the appellant were to be considered before passing a fresh order under Clause (d) of Section 148A. The Assessing Officer was instructed to address the appellant's request for certain documents and proceed further in compliance with the law.

Analysis:
The Court disposed of the appeal and connected application with no costs, providing directions for further proceedings. The judgment was signed by Mr. T.S. Sivagnanam and Mr. Hiranmay Bhattacharyya, JJ., with an order for an urgent certified copy to be furnished to the parties upon completion of legal formalities.