2022 (10) TMI 1122 - HC - Income Tax

Validity of Reopening of assessment - shorter period given to reply to notice u/s 142(1) - violation of principle of natural justice - HELD THAT - Single Judge noticed that though only two days time was given for filing the reply, the appellant has in fact filed his reply within the time granted by the authorities on 28.3.2022 itself and hence, the appellant cannot complain of violation of the principles of natural justice as he has utilized the limited opportunity granted to him. The learned Single Judge, thereafter, went on to hold that the appellant has got a remedy to challenge the order before the appellate authority and since the Writ Petition has been pending on the files of the court from 26.4.2022 the period spent by the appellant pursuant to the litigation from 24.6.2022 till the date of receipt of the judgment stands excluded while calculating the limitation period for preferring statutory appeal and dismissed the Writ Petition. Thus though we are in full agreement with the finding recorded by the learned Single Judge as the appellant has availed of the opportunity to file reply to the show cause notice. The appellant cannot complain that there is violation of principles of natural justice. But taking into consideration of all facts and circumstances of the case and the short time by which the appellant had to file reply, we deem it appropriate to grant sufficient time to the appellant herein to work out the remedy of the appeal. The appellant is given liberty to file an appeal on or before 17.10.2022 by enclosing a copy of this judgment. In the meanwhile, all coercive steps pursuant to Ext.P9 and P10 shall be kept in abeyance. W.A. dismissed.

Summary

Issues:
1. Timely filing of income tax returns for the assessment year 2015-16.
2. Notices issued under Section 142(1) and 142(3) of the Income Tax Act.
3. Assessment order and demand notice challenged in a Writ Petition.
4. Violation of principles of natural justice due to limited time for reply.
5. Appellate remedy and limitation period for preferring statutory appeal.

The judgment involves a case where the appellant, the proprietor of M/s.Brothers Autos, faced challenges regarding the timely filing of income tax returns for the assessment year 2015-16. Notices were issued under Section 142(1) and 142(3) of the Income Tax Act, requesting details of cash deposits and accounts/documents. The appellant responded to these notices, but a show cause notice with a short deadline was issued, leading to an assessment order and a demand notice. The appellant challenged these in a Writ Petition under Article 226 of the Constitution of India.

The learned Single Judge noted that although the appellant filed the reply within the limited time granted by the authorities, concerns were raised regarding the violation of principles of natural justice due to the short notice period. However, the Single Judge held that the appellant had the opportunity to challenge the order before the appellate authority. It was also mentioned that the period spent by the appellant during the litigation would be excluded while calculating the limitation period for preferring a statutory appeal, leading to the dismissal of the Writ Petition.

Upon review, the High Court, concurring with the Single Judge's findings, acknowledged that the appellant had utilized the opportunity to reply to the show cause notice, precluding any complaint of natural justice violation. Despite this, considering the circumstances and the limited time given to the appellant, the Court deemed it appropriate to grant additional time for the appellant to pursue the remedy of an appeal. The appellant was granted liberty to file an appeal by a specified date and directed that coercive steps related to the assessment order and demand notice be suspended until then.

In conclusion, the Writ Appeal was dismissed, with the High Court providing detailed observations and instructions to address the appellant's concerns regarding the assessment order and demand notice, emphasizing the importance of allowing sufficient time for pursuing the appellate remedy.