2023 (3) TMI 986 - HC - Income Tax

Validity of assessment u/s 144B - personal hearing was not granted to the petitioner s authorized representative - HELD THAT - As noticed personal hearing was not granted, before framing the assessment order, though asked for on behalf of the petitioner. Given this position, the aforementioned impugned order and notices cannot be sustained. Accordingly, the impugned order and notices are set aside, with liberty to the AO to pass a fresh order after according personal hearing to the petitioner s authorized representative. AO will intimate to the petitioner date and time when hearing will be granted in the matter.

Summary

Issues:
1. Challenge against assessment order under Income Tax Act, 1961.
2. Lack of personal hearing before framing the assessment order.
3. Allegations regarding sale of immovable property and capital loss.
4. Validity of impugned assessment order and notices.

Analysis:
1. The writ petition challenged an assessment order dated 26.09.2022 passed by respondent no.1 under Section 143(3) of the Income Tax Act, 1961, along with a notice of demand issued under Section 156 and two other notices issued under Section 271AAC(1) and Section 270A of the Act. The petitioner requested a personal hearing in response to a show cause notice but was not granted one, which is required under Section 144B of the Act.

2. The transaction in question involved the sale of immovable property known as Pushpanjali Farms, purchased by the petitioner in 2011-12. The petitioner intended to sell the property to a private limited company where the partners of the petitioner firm were also shareholders and directors. The sale deed was executed in 2019, and the petitioner claimed a capital loss in the relevant assessment year. However, the Assessing Officer found discrepancies and issued the impugned assessment order without granting a personal hearing.

3. The High Court found that the lack of a personal hearing before framing the assessment order was a procedural irregularity. Therefore, the impugned order and notices were set aside, allowing the Assessing Officer to pass a fresh order after granting a personal hearing to the petitioner's authorized representative. The petitioner was given two weeks to submit written submissions regarding the transaction before any further proceedings.

4. The judgment concluded by disposing of the writ petition with the mentioned directions, ensuring fairness and procedural compliance in the assessment process. The pending application was also closed as a result of the decision.