2024 (5) TMI 829 - HC - Income Tax

Reassessment u/s 148/148A - escaped income is less than Rs. 50 lakhs or more? - petitioner submits that the respondents only took into consideration the credits in the bank account and did not take into account the debits therefrom and if such debits had been taken into account she submits that the escaped amount would be much less than Rs. 50 lakhs - HELD THAT - On perusal of the impugned orders it is evident that the respondents proceeded ex-parte because the petitioner did not reply or otherwise participate in proceedings. It is also evident that the aggregate deposits were taken into consideration. The petitioner contends that the debits from the bank account were not taken into consideration and that if such debits were considered the alleged escaped income would be less than the prescribed minimum threshold of Rs. 50, 00, 000/-. Since the petitioner could not contest the matter on merits earlier the interest of justice warrants that an opportunity be provided to the petitioner. Since we propose to remand the matter we do not intend to record any findings with regard to the legal arguments raised with regard to the scope of Section 149(1)(b) of the I-T Act. The impugned orders are set aside and the matter is remanded for reconsideration. The petitioner is permitted to submit a reply to the show cause notice dated 27.02.2023 within 15 days from the date of receipt of a copy of this order.

Summary

Issues involved: Challenge to assessment order and penalty order on grounds of lack of reasonable opportunity for contesting the matter on merits.

Assessment Order Challenge: The petitioner, an income tax assessee, received a notice u/s 148A(b) of the Income Tax Act 1961 for alleged escaped income of Rs. 53,56,000 for the assessment year 2015-16. Subsequently, an order was issued u/s 148A(d) as the petitioner did not reply to the notice, followed by a notice u/s 148. The petitioner contended that the respondents only considered the credits in the bank account and not the debits, which would reduce the escaped amount. The petitioner argued that the 'income chargeable to tax' should be equal to or more than Rs. 50 lakhs.

Respondent's Submission: The respondent initiated re-assessment proceedings in compliance with legal requirements. The respondent argued that the writ petitions were filed after the limitation period and that the entire undisclosed credits could be considered for reopening the assessment. The respondent also highlighted that the petitioner did not file the return of income.

Judgment: The court observed that the respondents proceeded ex-parte due to the petitioner's non-participation. It was noted that the aggregate deposits were considered, but the debits were not. The court decided to remand the matter for reconsideration, allowing the petitioner to reply to the show cause notice within 15 days. The first respondent was directed to provide a reasonable opportunity to the petitioner, including a video conference hearing, and issue a fresh order within four months from the receipt of the petitioner's reply. The respondents were instructed to facilitate access to the portal for the petitioner.

Conclusion: The impugned orders were set aside, and the matter was remanded for reconsideration. The petitioner was granted an opportunity to respond to the show cause notice, with specific directives for a fair hearing process. The writ petitions were disposed of with no order as to costs.