2022 (10) TMI 1121 - HC - Income Tax

Validity of reopening of assessment - total violation of the principles of natural justice as no opportunity was given to the petitioner to submit documents, more so because of his sickness - HELD THAT - Petitioner was not well but the period of his illness was only from 08.12.2021 to 13.12.2021. Notices were issued under the provisions of the Income Tax Act, more particularly under Sections 148, 142(1) and 144 of the Income Tax Act both by the 2nd as well as the 1st respondents long prior to the said date. In fact, the notices were said to have been sent by registered post and also through e-mail but there was no response to any of those notices. The draft assessment order was also sent to the same e-mail, to which the petitioner responded and communicated with the respondent on 16.03.2022 itself, seeking time to file documents. Therefore, the plea of the petitioner that he is not in a habit of seeing the e-mails cannot be accepted. If that was so, the petitioner could not have responded so fast to the draft assessment sent on 15.03.2022. Therefore, the argument of learned Senior Counsel that there was total violation of the principles of natural justice cannot be accepted. It may be true that the petitioner herein would have to pay huge amount if the best assessment goes uncontested but, the averments made in the affidavit itself would show the petitioner has got statutory remedy of filing an Appeal under Section 246-A of the Income Tax Act to the National Faceless Appellate Authority. Hence, in view of statutory remedy of appeal under Section 246-A of the Income Tax Act to the National Faceless Appellate Authority, the petitioner can submit all the documents or information regarding cash deposits etc. Writ Petition is disposed of directing the petitioner to prefer an Appeal in which event the Commissioner of Appeals shall consider the same, including the request for condonation of delay, having regard to the facts involved in the case in accordance with law

Summary

Issues:
Assessment order challenge under Income Tax Act for violation of natural justice.

Analysis:
1. Assessment Order Challenge: The petitioner challenged the assessment order dated 30.03.2022, made for the assessment year 2016-17, under Sections 147, 144, and 144-B of the Income Tax Act, alleging violation of natural justice principles. The petitioner contended that the order was passed without giving an opportunity to explain the circumstances of the case. The petitioner claimed that due to health issues and lack of familiarity with income tax procedures, he did not respond to the notices and requests for filing returns. The petitioner requested the order to be set aside and the matter to be remanded to the Assessing Authority.

2. Facts in Issue: The petitioner, engaged in Film Distribution business since 2014, received notices under Section 148 of the Income Tax Act in 2021 for the assessment year 2016-17. Despite multiple notices and opportunities to file returns and provide documents, the petitioner failed to respond, citing reasons such as not checking emails regularly and being hospitalized. The Assessing Authority proceeded with best judgment assessment under Section 144 R/w. Section 147, assessing a significant amount to tax at a high rate due to undisclosed income from cash deposits.

3. Counter by Respondent: The respondent disputed the petitioner's claims, stating that notices were duly served through various means, including e-mail, speed post, and personal service. The respondent argued that the petitioner's lack of response to the notices led to the best judgment assessment. The respondent highlighted that the petitioner's claim of not receiving notices due to hospitalization was inaccurate, as the notices were served after the hospitalization period. The respondent emphasized that the petitioner's quick response to the draft assessment order via email contradicted the claim of not checking emails regularly.

4. Judicial Decision: The court, after considering the arguments, found no violation of natural justice principles in the assessment proceedings. The court noted that the petitioner had statutory remedies available, such as filing an Appeal under Section 246-A of the Income Tax Act to the National Faceless Appellate Authority. The court directed the petitioner to pursue the statutory remedy of filing an Appeal, where the Commissioner of Appeals would consider the case, including any request for condonation of delay, in accordance with the law. The Writ Petition was disposed of with no order as to costs, and any pending miscellaneous applications were closed.