2022 (5) TMI 1650 - HC - Income Tax

Validity of reopening of assessment - violation of the principles of natural justice as it has been passed without considering the reply as well as the supporting documents filed by the petitioner to the show cause notice - HELD THAT - This Court is of the view that the petitioner-assessee has a right to be granted adequate time in accordance with the Act to file its reply. Since the petitioner is 70 years old whose income tax affairs are handled by her husband who is bed ridden and suffering from acute depression this Court is of the view that the petitioner should have been granted further time to file her reply. As pertinent to mention that Section 148A(b) permits the Assessing Officer to suo moto provide upto thirty days period to an assessee to respond to the show cause notice issued under Section 148A(b) which period may in fact be further extended upon an application made by the assessee in this behalf and such period given to the assessee is excluded in computing the period of limitation for issuance of notice under Section 148 of the Act in terms of the third proviso to Section 149 of the Act. Consequently the order issued u/s 148A(b) as well as the notice issued u/s 148 of the Act are quashed and set aside.

Summary

Issues: Challenge to Income Tax notices and orders under Section 148A(b) and 148 for Assessment Year 2015-16; Violation of principles of natural justice; Consideration of reply and supporting documents by Assessing Officer; Adjourning proceedings due to petitioner's circumstances; Compliance with Section 148A(c) of the Income Tax Act; Granting adequate time to file reply; Remand of the matter to Assessing Officer for fresh order.

Analysis:

The High Court judgment pertains to a writ petition challenging an Income Tax notice and orders issued under Section 148A(b) and 148 for the Assessment Year 2015-16. The petitioner alleged a violation of the principles of natural justice, contending that the order was passed without considering the reply and supporting documents submitted in response to the show cause notice. The petitioner's counsel argued that the respondent erred by not acknowledging the detailed reply filed after seeking an adjournment due to the petitioner's circumstances, including age and health issues of the petitioner and her husband.

The petitioner's counsel emphasized that the action of the respondents contravened Section 148A(c) of the Income Tax Act, which mandates the Assessing Officer to consider the assessee's reply before passing an order under Section 148A(d). Citing a previous court decision in a similar context, the counsel argued for setting aside the order based on non-consideration of the submissions and documents provided by the petitioner.

On the other hand, the respondent's counsel mentioned that the petitioner had previously sought adjournments on multiple occasions, implying a delay in the proceedings. However, the Court acknowledged the petitioner's right to be granted adequate time to file a reply, especially considering the petitioner's age and the circumstances under which her tax affairs were managed by her husband, who was unwell.

The Court highlighted the provision of Section 148A(b), which allows the Assessing Officer to grant up to thirty days for the assessee to respond to a show cause notice, extendable upon application. It was noted that the period granted to the assessee for responding is excluded from the computation of the limitation period for issuing notices under Section 148.

Consequently, the Court quashed the order issued under Section 148A(b) and the notice under Section 148 of the Act. The matter was remanded to the Assessing Officer with directions to pass a fresh reasoned order within eight weeks, considering the reply filed by the petitioner and ensuring compliance with the law. The writ petition and related applications were disposed of based on these observations and directions.