2023 (3) TMI 370 - HC - Income Tax

Misalignment between the show cause notice and the assessment order - assessable value of imports is recorded in assessment order almost ten (10) times the figure which was recorded in the show cause notice - HELD THAT - According to us, the following aspects come to the fore. (i) First, as to the amount which remains unexplained according to the respondents/revenue; is it the amount which was mentioned in the show cause notice dated 14.03.2022 or the amount which is now part of the impugned assessment order. (ii) Second, as to whether or not the correct amount has been offered for tax, as contended by the petitioner. (iii) Third, as to whether the partnership firm, which runs under the name and style as the proprietorship concern, in fact, stood dissolved on 31.07.1999, as claimed by the petitioner. Given this position, we dispose of the writ petition giving leave to the petitioner to approach the AO for correction/rectification of the impugned assessment order. For this purpose, three (3) weeks are granted to the petitioner.AO, if approached, will pass a suitable order. Once the AO receives the representation/application in that behalf, he will pass a speaking order within the next eight (8) weeks. AO will also accord personal hearing to the petitioner and/or his authorized representative. For this purpose, the AO will ensure that a notice is issued to the petitioner which would indicate the date and time of the hearing.

Summary

Issues:
Challenge to assessment order dated 31.03.2022 for AY 2016-17 due to misalignment between show cause notice and assessment order, discrepancy in assessable value, dissolution of partnership firm, correction/rectification of assessment order.

Analysis:
The petitioner sought relief through a writ petition challenging the assessment order dated 31.03.2022 for AY 2016-17. The petitioner's counsel highlighted a significant discrepancy between the show cause notice and the assessment order regarding the assessable value of imports, which increased tenfold in the assessment order. Additionally, it was argued that a detailed response was provided to the show cause notice, explaining the transition from a partnership firm to a proprietorship concern.

The petitioner's counsel contended that the imports and corresponding sales were duly disclosed in various tax returns, although there was an acknowledgment that the Import Export Code (IEC) of the erstwhile partnership firm was used until 2017. The respondents expressed doubts regarding the dissolution of the partnership firm and the correctness of the tax amount offered. The court identified three key aspects for consideration: the unexplained amount, the accuracy of the tax amount disclosed, and the dissolution of the partnership firm.

In the judgment, the court disposed of the writ petition, granting the petitioner permission to approach the Assessing Officer (AO) for correction/rectification of the assessment order within three weeks. The AO was directed to issue a speaking order within eight weeks upon receiving the petitioner's representation, providing a personal hearing and ensuring submission of supporting documents. Importantly, the court clarified that its observations would not influence the AO's final decision following the petitioner's submission.

The parties were instructed to comply with the digitally signed copy of the order issued on the day of the judgment, emphasizing the need for corrective action regarding the assessment order discrepancies and dissolution of the partnership firm.