2022 (11) TMI 980 - HC - Income Tax

Reopening of assessment u/s 147 - objections were rejected on the next day - Reasonable time to respond to the final show cause notice - objections were raised since the objections were filed only on 21.03.2022, immediately the same was considered and rejected on 22.03.2022 - Period of limitation - HELD THAT - Even though the stand now taken by the Revenue that, at the time of rejection of objections dated 22.03.2022, that point also had been considered, this Court do not want to go into that controversy. Instead, this Court feels that the point of limitation since can be raised at any point of time it can once again be raised by the petitioner/assessee before the Appellate Authority and if it is raised that can also be considered as one of the prime objection with regard to the Assessment under Section 147 r.w.s. 144B. Insofar as the impugned orders, which were passed on 31.03.2022 is concerned, the final show cause notice admittedly was uploaded on 30.03.2022 at 12.01 a.m hours and the SMS alert was made at 1.00 a.m hours at 31.03.2022. On the same day at 16.09 hours i.e., 31.03.2022 the final orders of assessments, which are impugned herein, were passed. Therefore, there was absolutely no reasonable time was given to the petitioner/assessee to respond even to the final show cause notice. Plea raised that in between the rejection of objections and issuance of a final show cause notice, no notice either under Section 142(1) or 143(2) of the Act as the case may be, has been issued - As this larger issue, which had been raised in some other cases, where also this Court prima facie found reasons and entertained those writ petitions, which are pending before this Court, cannot be gone into in these writ petitions. This Court feels that, the impugned orders are liable to be interfered with. Accordingly the following orders are passed i. That the impugned orders are set aside and the matters are remitted back to the respondent for reconsideration. ii. While reconsidering the same, a reasonable time of two weeks shall be given to the petitioner/assessee to respond to the final show cause notice dated 30.03.2022, which need not be once again issued by the Revenue. iii. It is open to the petitioner to raise the point of limitation also along with reply submitted to the final show cause notice dated 30.03.2022. If such a plea of limitation is raised in the reply to be submitted by the petitioner/assessee, the same shall be considered and decided.

Summary

Issues:
Reopening of assessment under Section 147 of the Income Tax Act, 1961 - Objections to reasons for reopening - Limitation period - Violation of principles of natural justice - Time given to respond to final show cause notice - Notice under Section 142(1) or 143(2) not issued.

Analysis:
The writ petitions involved the common issue of reopening assessments for the Assessment Years 2013-2014, 2014-2015, and 2015-2016 under Section 147 of the Income Tax Act, 1961. The notice under Section 148 of the Act was issued on 31.03.2021, and the petitioner/assessee filed returns on 05.05.2021, seeking reasons for reopening. However, the reasons were only provided on 09.03.2022, leading to objections raised on 21.03.2022, which were promptly rejected on 22.03.2022.

The petitioner's counsel contended that the limitation period beyond four years was not properly addressed by the Revenue, despite specific objections raised. Additionally, it was argued that the petitioner was not given a reasonable opportunity to respond to the final show cause notice, leading to a violation of the principles of natural justice.

On the other hand, the Revenue argued that objections were considered promptly, and the final show cause notice was issued in due course. They maintained that the petitioner had not filed returns within the stipulated time under Section 139 of the Act. The Revenue also asserted that the petitioner was adequately notified, and reasonable time was provided to respond to the final show cause notice.

The Court considered both parties' submissions and observed that the limitation issue could be raised before the Appellate Authority at any time. It also noted that the petitioner was not given sufficient time to respond to the final show cause notice, highlighting a breach of natural justice principles. The Court set aside the impugned orders, remitting the matters back to the respondent for reconsideration.

In the final orders, the Court directed the respondent to provide a reasonable two-week period for the petitioner to respond to the final show cause notice. The petitioner was allowed to raise the point of limitation in their response. The Court emphasized the importance of due process and instructed the Revenue to proceed with the final Assessment Orders only after considering all relevant submissions.

Overall, the Court found in favor of the petitioner, emphasizing the need for adherence to procedural fairness and granting adequate time for responses in tax assessment proceedings.