2022 (9) TMI 1380 - HC - Income Tax

Reopening of assessment u/s 147 - order under Clause (d) of Section 148A - As argued procedure as required for issuance of notices and order under Section 148A(d) of I.T. Act are not in accordance with law - HELD THAT - Ascertaining the e-mail of the assessee, the order under Clause (d) of Section 148A a notice under Section 148 of the I.T. Act was also sent to the e-mail address of the assessee on 12.04.2022 and the same has been received, which is admitted by the petitioner. From the above averments in the counter, coupled with the provisions of the Act, it is very clear that the petitioner is having an opportunity of explaining his stand, in the proceeding initiated pursuant to the notice under Section 148 of the I.T. Act. In fact no prejudice is caused to the petitioner by the acts of the respondents, if any. Having regard to the above, the petitioner can explain his stand to the authorities by making an application, if not already made, within a period of four (4) weeks from today, more particularly, with regard to the substantial amount lying in the account, with the PAN number AACFV4149H. Accordingly, the writ petition is disposed of. There shall be no order as to costs.

Summary

Issues:
1. Validity of Show Cause Notice, Order, and Notice under Income Tax Act for Assessment Year 2015-16.
2. Dispute regarding the dissolution of a partnership firm and subsequent operations under a new partnership.
3. Service of notices and orders under Section 148A(d) of the Income Tax Act.
4. Legal requirements for issuance of notices and orders under the Income Tax Act.
5. Compliance with procedural and legal obligations by the authorities.
6. Dispute over the operation of a bank account and PAN number related to a dissolved firm.

Issue 1 - Validity of Notices and Orders:
The writ petition sought to challenge the Show Cause Notice, Order, and Notice issued under the Income Tax Act for the Assessment Year 2015-16 as illegal, arbitrary, and bad in law. The petitioner argued that despite the dissolution of a partnership firm, the authorities issued notices related to a different entity. The counter filed disputed these claims, asserting that the notices were issued due to non-filing of returns and substantial cash deposits. The court examined the details provided in the notices and orders and concluded that the authorities had valid reasons for initiating proceedings, rejecting the petitioner's contention.

Issue 2 - Partnership Firm Dissolution and Operations:
The case involved a partnership firm that was dissolved due to the death of a partner, subsequently leading to the operation of a new partnership with a different PAN number. The petitioner contended that the authorities erred in issuing notices pertaining to the dissolved firm. However, the court found that the bank account associated with the dissolved firm was still active, with significant funds and transactions, justifying the authorities' actions.

Issue 3 - Service of Notices and Orders:
The dispute also revolved around the service of notices and orders under Section 148A(d) of the Income Tax Act. The counter affidavit revealed attempts made to serve the petitioner through email and registered post, which were unsuccessful initially. Eventually, the notices were sent to the petitioner's email address, which was acknowledged by the petitioner. The court noted that the petitioner had the opportunity to explain their position, and no prejudice was caused by the service methods employed by the authorities.

Issue 4 - Compliance with Legal Requirements:
The petitioner argued that the procedures for issuing notices and orders under Section 148A(d) were not followed correctly. However, the court examined the documents and found that the authorities had adhered to the legal requirements, providing the petitioner with opportunities to respond and explain their position.

Issue 5 - Procedural Obligations and Compliance:
The judgment emphasized the importance of compliance with procedural obligations and legal provisions under the Income Tax Act. It highlighted the need for proper communication and adherence to statutory requirements by both the authorities and the petitioner to ensure a fair and transparent process.

Issue 6 - Operation of Bank Account and PAN Number:
A significant aspect of the case was the dispute over the operation of a bank account and the continued use of the PAN number associated with the dissolved firm. The court noted the substantial funds in the account and the ongoing transactions, indicating that the authorities were justified in initiating proceedings against the petitioner based on the active status of the account.

In conclusion, the court disposed of the writ petition, allowing the petitioner to explain their position within a specified timeframe regarding the funds in the bank account. The judgment highlighted the importance of addressing legal obligations and procedural requirements in matters related to income tax assessments and notices.