2022 (12) TMI 1171 - HC - Income Tax

Unexplained income u/s 69A - writ petitioner has deposited huge sums of money after demonetisation regime kicked in - As argued writ petitioner had in fact responded to the Section 142 (1) notice dated 30.11.2017 by way of return on 15.04.2019 but the respondent has not taken note of that - contention of the respondent that the respondent could not look into the responses of the writ petitioner solely because of technical glitch at the respondent's end - HELD THAT - The question as to whether an opportunity should be given to the assessee by the assessing officer by giving a notice and calling upon the assessee to show cause when Section 142(1) notice has been issued is left open as in the case on hand the respondent had admitted in the counter affidavit that notice has been issued and the responses of the writ petitioner could not be looked into solely owing to technical glitch at the respondent's end. Therefore, this order is being made in the unique fact setting and circumstances of the present case. It is also to be noted that the writ petitioner further contends that the writ petitioner is running a petrol bunk and there is a window available in this regard qua demonetisation. Therefore, this order will obviously not serve as precedent for Best judgment assessment orders under Section 144 where Section 142 (1) notice has been issued. In other words, this order is in the light of the admitted position of the respondent in paragraph 4 of the counter affidavit. Matter restored back for denovo assessment.

Issues involved:
1. Challenge to assessment order under the Income Tax Act, 1961 based on Best judgment assessment.
2. Treatment of deposits post-demonetization as unexplained income under Section 69A of IT Act.
3. Allegation of failure to consider responses to Section 142(1) notice due to technical glitch.
4. Contention regarding the necessity of giving opportunity to assessee when notice has been issued.
5. Unique circumstances affecting the assessment order in the present case.
6. Setting aside the assessment order and directing a de novo assessment exercise.

Analysis:
1. The petitioner challenged an assessment order under the Income Tax Act, 1961, made through Best judgment assessment. The order was based on treating post-demonetization bank deposits as unexplained income under Section 69A of the IT Act.

2. The petitioner contended that despite responding to the Section 142(1) notice, the responses were not considered by the assessing officer. The respondent attributed this to a technical glitch, as the responses were not reflected in the ITBA portal due to migration issues.

3. The Court acknowledged the technical problem faced by the respondent but emphasized the importance of considering assessee responses. It left open the question of providing an opportunity to the assessee when a notice has been issued, noting the unique circumstances of the case.

4. The judgment highlighted that the order was specific to the facts of the case and should not serve as a precedent for Best judgment assessment orders under Section 144 when a Section 142(1) notice has been issued.

5. Consequently, the assessment order was set aside due to the admitted technical glitch, and a de novo assessment exercise was directed. The Court instructed the respondent to consider the petitioner's responses and pass fresh orders within six weeks.

6. The writ petition was disposed of with the above directives, and no costs were awarded. The Court emphasized the need for a fair assessment process and the consideration of assessee submissions in such proceedings.

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