2023 (6) TMI 131 - HC - Income Tax

Reopening of assessment u/s 147 - notice issued u/s 148A(b) - non availing the opportunity to defend its case to the petitioner - HELD THAT - There is no gainsaying that the impugned order and the notice passed u/s 148A(d) and 148 remain without availing the opportunity to defend its case to the petitioner. There was an evident breach of principles of natural justice. Observance of natural justice is essential part of quasi judicial process. When the provisions of section 148A themselves provide expressly for giving opportunity of hearing to the assessee, it was indispensable for the department to extend the reasonable opportunity to the petitioner to respond to the notice to put forth his case. As some technical snag on the portal, which deprived the petitioner of such opportunity. Petitioner deserves to be given due opportunity. The impugned order passed u/s 148A(d) and notice of even date passed u/s 148 are hereby set aside only on the ground that the petitioner was deprived of opportunity pursuant to notice u/s 140A(b) of the Act. The proceedings are remanded to the competent authority of the respondent.The competent authority of the respondents shall grant opportunity to the petitioner to file its reply to notice issued by the AO u/s 148A(b) in respect of Assessment Year 2018- 2019 allowing the petitioner two weeks time to respond. Reasonable opportunity shall be given to the petitioner.

Issues involved: Setting aside order under section 148A(d) of the Income Tax Act, 1961 and notice issued under section 148 of the Act due to lack of opportunity for the petitioner to respond.

Summary:

Issue 1: Lack of Opportunity to Respond to Show Cause Notice

The petitioner filed its return of income for the Assessment Year 2018-2019 declaring total income. The respondent Income Tax authorities issued a notice under section 148A(b) of the Act, pointing out discrepancies in invoices issued by other entities. The petitioner requested an adjournment through the portal but the authorities proceeded to pass an order under section 148A(d) stating that income had escaped assessment. The petitioner contended that they were not given a proper opportunity to respond to the show cause notice, as the order was passed without allowing them to present their case.

Issue 2: Compliance with Principles of Natural Justice

The respondent authorities argued that the petitioner was given the required time to respond to the notice under section 148A(b) but failed to do so. They claimed that the petitioner's response was not visible on the portal, leading to the issuance of the order under section 148A(d) and subsequent notice under section 148. The respondent maintained that the petitioner's allegation of a breach of natural justice was unfounded since the necessary procedures were followed.

Issue 3: Observance of Natural Justice

The court noted that the petitioner's request for adjournment was successfully uploaded on the portal, indicating their intention to respond. However, due to a technical issue, the confirmation of the request was not visible. The court emphasized the importance of natural justice in quasi-judicial processes and highlighted that the petitioner was deprived of a fair opportunity to defend their case. It was concluded that the petitioner deserved a proper opportunity to respond as mandated by section 148A of the Act.

Judgment:

The High Court set aside the order under section 148A(d) and the notice under section 148, ruling that the petitioner was denied the opportunity to respond to the initial notice. The court directed the proceedings to be remanded to the competent authority for granting the petitioner a two-week period to file a reply to the notice issued by the Assessing Officer. The competent authority was instructed to conclude the proceedings within six weeks after receiving the petitioner's reply. The petition was allowed in favor of the petitioner.

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