2023 (6) TMI 1072 - HC - Income Tax

Assessment made u/s 147 r.w.s. 144 and 144B - Role of AO as adjudicator in making the computation - Petitioner submits, his client never had taxable income and this was the first assessment, consequent upon she having sold her property and it was land and building - HELD THAT - As demand of tax and interest etc. was made consequent to discovery by revenue that there had been a high value transaction entered into by petitioner, on having sold her property. There is no other allegation or particulars of otherwise income had or concealed by petitioner, as appearing from impugned assessment order. Here we must be mindful that the AO may, u/s 147 assess income having escaped assessment. In impugned assessment order, also stands invoked is section 144, providing for best judgment assessment. It is clear that the Parliament intended the AO to be both investigator, for purpose of detecting income having escaped assessment and adjudicator, for making the best judgment assessment. There does not appear to be any dispute that the property consisted of land and building and there is absence of enquiry on relief under section 148, the revenue was mandated to give. In the present case the Assessing Officer abdicated his role as adjudicator in making the computation. In the circumstances, we are inclined to accept that petitioner deserves a further opportunity to file a return.

Summary

Issues involved: Assessment order under section 147 read with section 144 and 144B in Income Tax Act, 1961 due to non-compliance with notices during the pandemic.

Summary:

Issue 1: Compliance with notices during the pandemic
The petitioner, an assessee, sought interference in the assessment order dated 21st March, 2022, as she could not comply with the notices issued due to the pandemic. The petitioner's advocate argued for setting aside the impugned order to allow for filing a return and participating in the assessment process. The Court noted the petitioner's claim of inability to respond to notices and granted the petitioner a further opportunity to file a return.

Issue 2: Assessment of taxable income
The petitioner, in her first assessment, had sold her property consisting of land and building. The Senior Standing Counsel for revenue confirmed compliance with provisions including section 144B and demonstrated that notices were duly issued to the assessee. Since the assessee had not filed a return or responded to the notices, the Court found no enquiry for allowing indexation. The assessment order was set aside, and the petitioner was directed to submit her return within two weeks for assessment purposes.

Conclusion:
The High Court set aside and quashed the impugned assessment order, granting the petitioner a further opportunity to file a return. The writ petition was disposed of, emphasizing the impact of the pandemic on the assessee's ability to respond to notices and participate in the assessment process.