2023 (2) TMI 715 - HC - Income Tax

Validity of assessment order - Non responses to notices sent u/s 142(1) and 143(2) - Mistake on the part of Auditor / Tax Practitioner - only contention of the petitioner is that the said notices were received in the Email address of the Chartered Accountant or the Income Tax Practitioner engaged by him for filing the revised return of income, and income Tax Practitioner or the Chartered Accountant did not communicate with the petitioner about the notices received from the respondent - HELD THAT - The petitioner has engaged the service of the Chartered Accountant, only after reposing faith and trust in him. For the negligence if any of the Chartered Accountant or the Income Tax Practitioner, the respondent cannot be held responsible. Therefore, the contention of the petitioner that he was unable to respond to the notices under section 142(1) and 143(2) of the Income Tax Act has to be necessarily rejected. Having failed to make use of the opportunities granted by the respondent to respond to the notices sent by them, the question of entertaining this writ petition will not arise. However, the petitioner categorically claims that if he had been afforded an opportunity of personal hearing, he would have been able to establish before the authority concerned that he had infact incurred the expenditure which has been disallowed under the impugned assessment order. The petitioner having failed to respond to the several notices sent by the respondent, the petitioner cannot contend that he was not afforded personal hearing. The tax liability involved is also a meagre sum and therefore, the question of entertaining this writ petition, when the petitioner has failed to respond to the several notices issued by the respondent, will not arise. For the foregoing reasons, this Court is inclined to permit the petitioner to file the statutory appeal as against the impugned assessment order within a time frame to be fixed by this Court. This Court is of the considered view that a period of four weeks will suffice for the petitioner to prefer the statutory appeal, if aggrieved by the impugned assessment order.

Summary

Issues:
1. Lack of personal hearing in assessment proceedings despite a specific request.
2. Disallowance of deduction under Chapter 6A of the Income Tax Act.
3. Allegation of violation of principles of natural justice.
4. Failure to respond to notices issued under sections 142(1) and 143(2) of the Income Tax Act.
5. Negligence of Chartered Accountant or Income Tax Practitioner.
6. Requirement of statutory appeal.

Issue 1: Lack of Personal Hearing
The petitioner challenged the assessment order citing the absence of personal hearing despite a specific request made in his reply. The respondent, in response, argued that multiple opportunities were granted to the petitioner to respond to notices under sections 142(1) and 143(2) of the Income Tax Act. The respondent contended that the impugned assessment order was based on inflated expenditure declared by the petitioner in a revised annual return for the assessment year 2017-18.

Issue 2: Disallowance of Deduction
The petitioner contested the disallowance of a sum under Chapter 6A of the Income Tax Act, which was not disclosed in the show cause notice. The respondent justified the disallowance, stating that the petitioner failed to provide proof for claiming deductions under relevant sections despite multiple opportunities granted.

Issue 3: Violation of Principles of Natural Justice
The petitioner argued that the impugned assessment order violated the principles of natural justice due to the lack of personal hearing. The petitioner relied on a previous decision and emphasized the necessity of personal hearings when adverse views are contemplated. However, the court found that the petitioner's failure to respond to notices undermined the claim of denial of natural justice.

Issue 4: Failure to Respond to Notices
The respondent contended that the petitioner did not respond to notices issued under sections 142(1) and 143(2) of the Income Tax Act, leading to the impugned assessment order. The petitioner's reliance on the negligence of the Chartered Accountant or Income Tax Practitioner was rejected, holding the petitioner responsible for non-compliance.

Issue 5: Negligence of Chartered Accountant
The petitioner attributed the lack of response to notices to the negligence of the Chartered Accountant or Income Tax Practitioner, but the court held the petitioner liable for the consequences of non-compliance. The respondent emphasized that the petitioner should have filed a statutory appeal instead of opting for a writ petition.

Issue 6: Requirement of Statutory Appeal
The court directed the petitioner to file a statutory appeal against the assessment order within a specified timeframe. While granting this limited relief, the court dismissed the petitioner's claim of violation of natural justice, emphasizing the importance of responding to official notices and following due process in tax matters.

In conclusion, the court disposed of the writ petition, instructing the petitioner to pursue the statutory appeal within the stipulated time, failing which the respondent could enforce the assessment order.