2024 (6) TMI 1298 - HC - Income Tax

Validity of Reassessment order passed - violation of principles of natural justice as petitioner's reply and documents attached thereto not examined - HELD THAT - On the basis that the petitioner's reply and documents attached thereto could not be extracted and examined, the order was issued. In the factual context of the petitioner having submitted a reply along with relevant documents, the non-consideration thereof violates principles of natural justice. Hence, the impugned assessment order is unsustainable. Therefore, the impugned assessment order is set aside and the matter is remanded for reconsideration from the stage of reply to the show cause notice cum draft assessment order. The respondents are directed to take necessary measures to enable the petitioner to upload the reply on the portal along with the relevant attachments. The petitioner is directed to upload the reply within two weeks from the date of receipt of a copy of this order. Upon receipt thereof, the second respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing through video conference, and thereafter issue a fresh order within three months from the date of receipt of the petitioner's reply.

Issues: Challenge to assessment order for assessment year 2015-16 on grounds of breach of principles of natural justice.

Analysis:
1. The assessment order for the assessment year 2015-16 was challenged in a writ petition based on the breach of principles of natural justice. The petitioner's assessment was reopened under Section 148A(b) of the Income-tax Act, 1961, and a draft assessment order was issued along with a show cause notice. The petitioner replied to the notice by attaching several documents, but the second respondent informed that the attached documents were not in a readable form. The impugned assessment order was issued without considering the attachments to the petitioner's reply, leading to the challenge on grounds of natural justice.

2. The petitioner's counsel argued that all relevant information, including details related to the petitioner's parents' income-tax returns, was attached to the reply dated 14.03.2024. Despite the petitioner's grievance that the attached documents were in readable PDF format, the proposed variations in the assessment order were confirmed without examining these attachments. The counsel contended that this non-consideration of crucial documents violated the principles of natural justice, warranting interference with the impugned order.

3. On the other hand, the respondents' counsel highlighted that the petitioner was given multiple opportunities to explain the transaction under assessment but failed to provide the necessary documents in a readable form. The petitioner had submitted various documents, including bank statements, income sources, and acknowledgments, but the inability to submit these documents in an extractable mode led to the non-consideration of the reply and attachments. The respondents argued that the petitioner's failure to provide documents in a readable form justified the issuance of the assessment order.

4. The High Court, after considering the arguments, found that the non-consideration of the petitioner's reply and attachments due to readability issues violated the principles of natural justice. Consequently, the impugned assessment order dated 26.03.2024 was set aside, and the matter was remanded for reconsideration from the stage of the reply to the show cause notice cum draft assessment order. The respondents were directed to facilitate the petitioner in uploading the reply with relevant attachments, and the petitioner was instructed to do so within two weeks. A reasonable opportunity, including a personal hearing through video conference, was to be provided to the petitioner, with a fresh order to be issued within three months from the receipt of the reply.

5. The writ petition was disposed of without any order as to costs, and the connected miscellaneous petitions were closed, ensuring that the assessment process was to be revisited with due regard to the principles of natural justice and procedural fairness.

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