2024 (7) TMI 1555 - HC - Income Tax

Reopening of assessment u/s 147 - reason to believe - information that can be relied upon by the Assessing Officer to reopen assessment of escaped income - mandation of providing reasonable opportunity of hearing - HELD THAT - It is only with respect to providing reasonable opportunity of hearing as per Circular dated 22.08.2022 of the Central Board of Direct Taxes that this Court has found that such reasonable opportunity of hearing was not given before Order u/s 148(d) was issued. In our considered opinion, there is no dispute regarding explanation given under Section 148 regarding information that can be relied upon by the Assessing Officer to reopen assessment of escaped income. Revenue Audit Objections can be considered as a valid ground for opening assessment that has concluded. This Court is of the considered opinion that the reply of the petitioner had specifically asked for documents to be supplied including complete case proceedings and for personal hearing, which was not given. AO has acted in undue haste. The orders u/s 148A(d) and u/s 148 are set aside. The respondents shall provide all relevant documents that have been asked for by the petitioner in his representation by making payment of necessary fees to the department, within a period of one week from today. The petitioner shall submit his reply within one week, thereafter. A personal hearing shall be given by the AO.

Summary

Issues:
1. Validity of notice under Section 148 of the Income Tax Act.
2. Compliance with procedural requirements in assessment proceedings.
3. Right to be heard and provide relevant documents during reassessment proceedings.

Detailed Analysis:
1. The petitioner challenged the validity of the notice issued under Section 148 of the Income Tax Act, along with subsequent orders for reassessment. The petitioner argued that the notice and orders were issued without providing necessary documents and a personal hearing. The petitioner sought the quashing of the notice and orders due to non-compliance with procedural requirements.

2. The petitioner's case involved the initiation of search and seizure operations under Section 132 of the Income Tax Act, leading to the assessment of unaccounted cash, jewellery, and stock discrepancies. The Assessing Officer made additions to the declared income based on unexplained cash and excess stock. The petitioner appealed against the assessment order, which was challenged by the Revenue Audit, leading to the issuance of a notice for reassessment under Section 148A(b).

3. The petitioner contended that the Assessing Officer did not provide copies of the Audit Objections or allow for a personal hearing before passing the orders under Section 148A(d) and Section 148. The petitioner's request for relevant documents and a personal hearing was denied, leading to a challenge on the grounds of violating the principles of natural justice. The petitioner emphasized the importance of being heard and having access to relevant documents during reassessment proceedings.

4. The High Court considered various judgments cited by both parties, including decisions from different High Courts and the Supreme Court. The Court emphasized the importance of following procedural fairness and providing a reasonable opportunity to the assessee during assessment and reassessment proceedings. The Court noted that the Assessing Officer had acted hastily without providing the petitioner with necessary documents and a personal hearing.

5. In the final judgment, the Court set aside the orders under Section 148A(d) and Section 148, directing the respondents to provide all relevant documents requested by the petitioner within a week. The Court also mandated a personal hearing for the petitioner, emphasizing the right to be heard and the importance of procedural fairness in income tax proceedings. The Court allowed the writ petition to the extent of ensuring compliance with procedural requirements and the principles of natural justice in the reassessment process.