2024 (4) TMI 987 - HC - Income Tax

Validity of Assessment order u/s 147 r.w.s. 144B - Assessment challenged being in violative of the principles of natural justice - HELD THAT - Admittedly the petitioner was initially served with a notice on 12.11.2021 asking for the books of accounts and other documents mentioned in the annexure to the said notice. Another notice was served in this regard on 20.12.2021 giving reasons for re-opening of the assessment in the case of the petitioner for the year 2014-2015 u/s 147 - However, there has not been much of the developments till 17.03.2022 when the show cause notice was abruptly issued and the entire proceedings stood concluded within a period of less than fifteen (15) days time. From the pleadings and documents and also the submissions made by Standing Counsel for the Income Tax Department, what also is not very clear is, whether after the reply which the petitioner had submitted on 19.03.2022, the respondent authorities did they ever issue any show cause notice to the assessee for any further proceedings drawn beyond the reply to the show cause notice which the petitioner had already filed. There is no proof of any notice of personal hearing or any other hearing calling upon the petitioner to personally make his submissions. The presumption drawn by the petitioner for it to be a notice u/s 144C cannot be doubted. Another aspect which needs to be considered is that for the assessment year 2014-2015, the show cause notice was issued on 17.03.2022 and the time limit for response was up till 20.03.2022. This duration was too short a period, particularly, when the explanation and details have been sought of an assessment year about seven to eight years old. Thereafter, vide notice dated 21.03.2022 the authority concerned extended the period by another two days. Now there is no proof when these notices issued on 21.03.2022 extending the period from 21.03.2022 to 23.03.2022 have been effectively served upon the petitioner or not. Meanwhile, the petitioner did gave his reply on 19.03.2022 before the authority concerned. No hesitation in reaching to the conclusion that the proceedings drawn by the respondent authorities apparently seems to be in a hasty manner without a reasonable opportunity being given to the petitioner. Thus, the impugned order therefore to the aforesaid extent is set aside/quashed. Since the impugned order is being quashed on the technical ground of fair opportunity not being provided, the matter stands remitted back to the authority concerned who in turn after hearing the petitioner may proceed and decide strictly in accordance with law without any further delay. WP stands allowed.

Summary

Issues involved:
The issues involved in this case are the validity of the assessment order passed by the Income Tax Department and the adherence to principles of natural justice in the proceedings.

Validity of Assessment Order:
The petitioner filed a writ petition seeking a Mandamus to declare the assessment order as void, illegal, arbitrary, and without authority of law. The challenge was based on the alleged violation of natural justice principles. The petitioner argued that the assessment order under Section 147 read with Section 144B of the Income Tax Act was passed hastily, without proper adherence to procedural requirements.

Principles of Natural Justice:
The petitioner contended that the show cause notice issued was seeking an explanation on a draft assessment order under Section 144C of the Act. It was argued that non-adherence to the mandatory requirements under Section 144C rendered the proceedings invalid. The petitioner also raised concerns about the short period given for responses and the lack of a reasonable opportunity to present their case.

Legal Arguments:
The Senior Counsel for the petitioner emphasized that the minimum period required for filing objections after issuing a draft assessment order is thirty days, which was not adhered to in this case. On the other hand, the Senior Standing Counsel for the Income Tax Department argued that the petitioner should have availed the statutory remedy of appeal instead of directly approaching the writ court. The respondent authorities were criticized for concluding the proceedings hastily within a short period.

Court's Analysis and Decision:
After considering the arguments from both sides and examining the records, the court found that the proceedings were rushed and lacked a fair opportunity for the petitioner to present their case. The court observed discrepancies in the timeline of notices and responses, indicating a lack of proper communication and procedural fairness. Consequently, the court set aside/quashed the impugned order and remitted the matter back to the authority for a fresh decision in accordance with the law.

Conclusion:
The court allowed the writ petition, emphasizing the importance of providing a reasonable opportunity to the petitioner in such proceedings. No costs were awarded, and any pending miscellaneous petitions were ordered to be closed as a result of the judgment.