2023 (2) TMI 319 - HC - Income Tax

Reopening of assessment u/s 147 - absence of service of notice u/s 142(1) - HELD THAT - This Court is of absence of service of notice u/s 142(1) issued by the respondent on 21.2.2022 for being unavailable on the web portal and the order disposing of the objections on 19.3.2022 and also the order disposing of the objections of the petitioner. The chronology of events referred to the two orders of disposing of the objections one which is of 15.9.2021 against which objections were raised by the petitioner on 21.9.2021 which though was not responded to, the another speaking order of disposing of the objections had been received by the petitioner on 19.3.2022. What this Court is to be concerned with is non availability of the notice dated 21.2.2022 on webportal. The income tax department has already emplaned the technological advancement and its insistence also is for uploading the return of income and all documents on webportal. Any technological glitch of the software web-portal would surely prejudice the assessees seriously and therefore, when in the affidavit-in- reply also, nothing has been explained and in relation to the specific averments of non-service of this notice u/s142(1) can surely be noticed, this technical glitch is not permitting the respondent to fulfill its statutory obligation of serving the notice to the petitioner. Therefore, the order of assessment which has been passed subsequently in breach of the availability of opportunity of hearing which is required to be given to the petitioner, this action of the respondent would warrant interference. This Court needs to also hold that the Court cannot be oblivious of the fact that the assessment is filed on National Faceless Assessment Centre and the appeal also is required to be filed before the National Faceless Assessment Centre. The technical glitch would seriously prejudice the rights of the parties and therefore by quashing and setting aside the order of assessment, the matter needs to be relegated to the authority concerned from the stage of issuance of notice u/s 142(1). Let the reply be tendered by the petitioner within two weeks of service of notice.

Summary

Issues:
- Absence of service of notice under Section 142(1)
- Validity of assessment order under Section 147 read with Section 144B

Analysis:

Issue 1: Absence of service of notice under Section 142(1)
The petitioner, a company, filed its return of income for A.Y. 2017-18. The respondent issued a notice under Section 148 dated 31.3.2021 for reassessment. The petitioner raised objections to the non-speaking order disposing of objections on 9.9.2021. Subsequently, the petitioner received another order disposing of objections on 19.3.2022 through email. The petitioner claimed not to have access to the notice under Section 142(1) and objected to the assessment order passed on 30.3.2022. The respondent denied the petitioner's claims, stating that due procedure was followed. The Court noted the absence of the notice dated 21.2.2022 on the web portal, emphasizing the importance of technological advancements in the income tax department. The Court held that the technical glitch in not serving the notice prejudiced the petitioner's rights, warranting interference. The Court directed the matter to be sent back to the authority from the stage of the notice under Section 142(1) for proper adjudication, ensuring the petitioner's opportunity to be heard.

Issue 2: Validity of assessment order under Section 147 read with Section 144B
The petitioner contended that the assessment order under Section 147 read with Section 144B was non-est due to a violation of statutory provisions. The respondent, in the affidavit-in-reply, defended the correctness of the assessment order, stating it was passed following due procedure. The Court, after considering the submissions, focused on the absence of service of the notice under Section 142(1) and the importance of technological glitches affecting the rights of the parties. The Court emphasized the need to ensure proper procedures and opportunities for the petitioner, especially in the context of National Faceless Assessment Centre. Consequently, the Court quashed the assessment order and directed the matter to be reconsidered from the stage of the notice under Section 142(1) to safeguard the petitioner's rights. The petitioner was given an opportunity to respond, and subsequent stages were to be decided in accordance with the law, without prejudicing the rights of either party.

In conclusion, the High Court of Gujarat held that the absence of service of the notice under Section 142(1) due to a technical glitch warranted interference in the assessment proceedings. The Court emphasized the importance of upholding procedural fairness and ensuring that parties are not prejudiced by technological shortcomings. The judgment directed a reconsideration of the matter from the initial stage of the notice under Section 142(1) to safeguard the petitioner's rights and ensure due process in the assessment proceedings.