2024 (6) TMI 1297 - HC - Income Tax

Assessment order passed ignoring request to extension of time to reply to SCN - proposal for adding all credits in the bank statement - HELD THAT - On perusal of show cause notice it is evident that such notice deals with aggregate credit entries in the petitioner's bank statement and the proposal to treat this aggregate sum as unexplained money u/s 69A r/w 115BBE of the Income Tax Act. On perusal of earlier notices under Sections 143(2) and 142(1), this issue was not raised in such notices. In these circumstances, it was necessary to provide a reasonable time to the petitioner to respond to the show cause notice. The show cause notice granted three days originally and this time limit was extended by a further three days. Since sufficient time was not given to the petitioner to respond meaningfully to the show cause notice, the impugned assessment order calls for interference. The impugned assessment order dated 23.03.2023 is set aside and the matter is remanded for reconsideration. The petitioner shall reply to the show cause notice within a maximum period of two weeks from the date of receipt of a copy of this order by enclosing all relevant documents.

Summary

Issues:
Challenge to assessment order for assessment year 2018-2019 due to insufficient time provided to respond to show cause notice regarding credits in bank statement.

Analysis:
The assessment order dated 23.03.2023 for assessment year 2018-2019 is being challenged in this writ petition due to the initiation of reassessment proceedings against the petitioner. The petitioner requested additional time to respond to the proposal regarding credits in the bank statement, but the impugned assessment order was issued before granting sufficient time. The petitioner's counsel argued that the proposed variation in credits was introduced for the first time in the show cause notice dated 13.03.2024, and the time provided to respond was inadequate. The communication adjourning the case was digitally signed late at night, raising concerns about effective response time.

The respondent's counsel contended that the petitioner had received prior notices under Sections 143(2) and 142(1), so the limited time provided for the show cause notice did not prejudice the petitioner. However, upon reviewing the show cause notice dated 13.03.2024, which dealt with a substantial amount in the bank statement, it was found that the issue was not raised in earlier notices. The court concluded that the petitioner was not given sufficient time to respond meaningfully, leading to interference with the assessment order.

Therefore, the High Court set aside the impugned assessment order and remanded the matter for reconsideration. The petitioner was directed to reply to the show cause notice within two weeks, enclosing all relevant documents. The 1st respondent was instructed to provide a reasonable opportunity, including a personal hearing via video-conference, and issue a fresh assessment order within four months from receiving the petitioner's reply. The respondents were also directed to grant necessary portal access for uploading the reply. The writ petition was disposed of without costs, and connected miscellaneous petitions were closed.