2024 (2) TMI 642 - HC - Income Tax

Validity of notice proposing for Best Judgement assessment u/s 144 - Failure to file ITR in response to notice u/s 148 r.w.s. 142(1) due to medical reasons and recovery proceedings against the company under the provisions of SARFAESI Act - unexplained income under Section 69A - HELD THAT - Managing Director of the company is suffering with certain kind of mental illness and for that reason the relevant documents could not be submitted by the petitioner s company before the Income Tax Department. The petitioner company maybe granted a further time of six weeks for producing the relevant documents, as a last chance. Considering the illness of the Managing Director. As respondents submits, that for the past one year the petitioner has been seeking time and has not complied with the notices issued to him. The petitioner has not filed its return. There is an unexplained income of the petitioner Present writ petition is disposed of, with liberty to the petitioner to file return and submit all the requisite documents in response to the notice dated 09.01.2024, within a period of six weeks from today (16.02.2024), failing which, the revenue will proceed to finalize the assessment u/s 144 of the Income Tax Act.

Summary

Issues involved:
The issues involved in the judgment are non-filing of income tax return, notices issued under different sections of the Income Tax Act, unexplained income, and granting of time for submission of relevant documents.

Non-filing of Income Tax Return:
The petitioner company did not file the return of income for the assessment year 2019-2020 despite being issued a notice under Section 148 of the SARFAESI Act. An order was passed under Section 148(b) due to non-compliance with the notice.

Not Complying with Notices:
The petitioner failed to file the return or comply with the notices issued under Section 142(1) of the Income Tax Act after being issued a notice under Section 148 for filing the return.

Unexplained Income and Show Cause Notice:
A show cause notice was issued under Section 144 of the Income Tax Act, giving the petitioner an opportunity to explain why an amount of Rs. 4,33,57,333/- should not be treated as unexplained income under Section 69A. The petitioner replied to the notice, but subsequently, another notice was issued for adding the variation amount.

Granting of Time for Submission of Documents:
The counsel for the petitioner requested for a further six weeks to produce relevant documents due to the Managing Director's mental illness. The Standing counsel for the respondents highlighted the petitioner's history of seeking time without compliance. The court disposed of the petition, granting the petitioner six weeks to file the return and submit all requisite documents, failing which the revenue will proceed to finalize the assessment under Section 144 of the Income Tax Act.