2023 (8) TMI 725 - HC - Income Tax

Validity of third respondent s assessment order u/s 143(3) - seeking directions to the fourth respondent to lift the attachment of his bank accoun t - HELD THAT - As in the peculiarities of this case viz ., the petitioner has appeared before the assessing officer after issuance of notice u/s 144 of the Act and has filed financials, if the reassessment is reframed under Section 143(3) of the Act upon examination of all questions there would be no room for the grievance that the proceeding, which is begun for the best judgment assessment, has resulted in an order under Section 143(3) of the Act. On a careful consideration of the submissions, and the undisputed fact that the balance is about Rs. 1,25,00,000/- this Court is of the view that the third respondent must reframe the assessment order for the relevant year expeditiously within a time frame and the petitioner until then should be permitted to operate his account with M/s Kotak Mahindra Bank subject to maintaining a certain reasonable minimum balance. Order - Writ petition is allowed in part and the third respondent s assessment order u/s 143(3) of the Income Tax Act, 1961 is quashed. The third respondent shall reframe assessment for the assessment year 2021-22 within six 6 weeks from the petitioner s first date of appearance after this order with due opportunity to the petitioner. The petitioner until then is permitted to operate his account with M/s Kotak Mahindra Bank subject to maintaining a minimum balance of Rs. 75,00,000/-. The petitioner without further notice shall appear before the third respondent on 05.04.2023.

Summary

Issues involved:
The petitioner challenges the assessment order under Section 143(3) of the Income Tax Act, 1961 and seeks the lifting of the attachment of his bank account with M/s Kotak Mahindra Bank.

Details of the Judgment:

1. The petitioner contests the assessment order, arguing that transactions from 2014 to 2019 cannot be assessed for the year 2021-22, resulting in additional income. The petitioner was not served with a notice under Section 144, although he appeared before the assessing officer, rendering the order without jurisdiction.

2. The respondents defend the assessment, stating that undisclosed advances were brought into assessment as they were not reflected in the books of accounts. However, the transactions in question predate the current assessment year, necessitating a reconsideration of the assessment.

3. The Court notes that the transactions under scrutiny relate to previous assessment years and should have been considered in that context. The assessment order failed to address this critical aspect, warranting intervention.

4. Regarding the petitioner's ability to operate his bank account during the reassessment, the respondents propose a deposit of 20% of the remaining amount, while the petitioner argues against such conditions, citing potential business repercussions.

5. After considering the submissions and the remaining balance, the Court quashes the assessment order and directs the third respondent to reframe the assessment within six weeks. The petitioner is allowed to operate his account with M/s Kotak Mahindra Bank, subject to maintaining a minimum balance.

6. In a subsequent order, the Court permits the petitioner to operate three accounts with M/s Kotak Mahindra Bank, maintaining a cumulative balance of Rs. 75,00,000 across all accounts as stipulated in the earlier order.