2023 (8) TMI 1074 - HC - Income Tax

Reopening of assessment u/s 147 - unexplained deposits during demonetization - HELD THAT - As attempt of the petitioner to contrive the jurisdiction of this Court under Article 226 of the Constitution of India on the ground of violation of principles of natural justice cannot be countenanced. The petitioner has given his explanation which was found in adequate. Therefore AO has passed the impugned order u/s 147 r/w 144B. A reading of the impugned order indicates that the petitioner has deposited a sum in the wake of demonetization. Therefore the petitioner was called upon to give his explanation. The petitioner has however not properly explained the facts surrounding deposit of the aforesaid sum - Hence the impugned order was passed by the respondent. Therefore there is no merits to challenge the impugned order in the writ petition. As such this writ petition cannot be entertained as the petitioner has an alternate remedy before the Appellate Commissioner. This writ petition is dismissed with liberty to the petitioner to file statutory appeal against the impugned order before the Appellate Commissioner within a period of 30 days from the date of receipt of a copy of this order.

Summary

Issues Involved:
The judgment involves challenges to an Assessment Order under Section 147 r/w 144(B of the Income Tax Act, 1961, based on issues of natural justice, adequacy of explanation, and proper consideration of responses by the Assessing Officer.

Natural Justice Issue:
The petitioner contended that the assessment was completed in a preemptive manner without adequate time, violating principles of natural justice. The Assessing Officer rejected the petitioner's request for adjournment, erroneously stating that no response was furnished. Citing the decision in Parthasarathy Chita v. ITO, it was argued that the impugned order should be set aside due to this procedural irregularity.

Consideration of Responses Issue:
The petitioner argued that the Assessing Officer brought two items of additions to tax without considering the petitioner's response, causing undue hardship and irreparable loss. This led to the filing of a writ petition under Article 226 of the Constitution of India, seeking the Court's intervention to address the erroneous demand created by the impugned order.

Adequacy of Explanation Issue:
Upon review, the Court found that the petitioner's attempt to invoke the Court's jurisdiction under Article 226 based on natural justice grounds was unfounded. The petitioner's explanation was deemed inadequate, leading the Assessing Officer to pass the impugned order under Section 147 r/w 144B of the Income Tax Act, 1961. Specifically, the petitioner failed to properly explain the circumstances surrounding a deposit of Rs. 52,85,000 during demonetization, which prompted the issuance of the impugned order.

Judgment Outcome:
The Court dismissed the writ petition, advising the petitioner to pursue the alternate remedy of filing a statutory appeal before the Appellate Commissioner within 30 days. The Appellate Commissioner was directed to consider the appeal and pass appropriate orders on merits in accordance with the law, ensuring the petitioner's right to be heard during the appeal process. No costs were awarded, and connected miscellaneous petitions were closed as a result of the judgment.