2024 (7) TMI 659 - HC - Income Tax

Validity of assessment order - breach of principles of natural justice - addition of Bogus purchases - at least two notices were issued u/s 142(1) and the assessee was provided sufficient opportunity to submit necessary documents and clarifications. Since the assessee failed to provide complete information - as petitioner submitted a presentation, wherein, inadvertently, the petitioner failed to remove double entries relating to payments reflected in journal entries in the head and branch offices HELD THAT - As petitioner has placed on record the relevant e-mail, which prima facie shows that invoices from 30 vendors are attached as PDF's. Petitioner contends that the discrepancy in purchase value would stand fully reconciled if these invoices are examined conjointly with the reconciliation statement. This makes out a case for reconsideration. Because the petitioner had sufficient opportunity, including a personal hearing, and failed to provide all these documents in time, it is just and necessary that costs be imposed on the petitioner. The impugned order is set aside on condition that the petitioner pays a sum of Rs. 30,000/- as costs to the Adyar Cancer Institute, Chennai, within 15 days from the date of receipt of a copy of this order. The petitioner is permitted to submit invoices and any other documents within the aforesaid period of 15 days.

Summary

Issues: Challenge of assessment order for breach of natural justice

The judgment pertains to the challenge of an assessment order dated 28.03.2024 for the assessment year 2022-23 on the grounds of breach of principles of natural justice. The petitioner had received notices under Section 142(1) of the Income Tax Act, 1961, and had replied to the show cause notice issued on 28.03.2024. The petitioner contended that the Income Tax Department did not access the invoices provided in an email dated 25.03.2024, which were crucial for the assessment. The petitioner also highlighted inadvertent errors in the presentation submitted during the assessment proceedings. On the other hand, the respondent, represented by a senior standing counsel, argued that the assessee had multiple opportunities to provide necessary documents and clarifications but failed to do so adequately. The respondent maintained that the assessing officer had considered the replies and confirmation letters from vendors, with a majority of them matching the purchase values indicated by the petitioner. The respondent contended that there was no basis for interference under Article 226 of the Constitution of India.

The assessment order noted discrepancies in the submission of invoices by the assessee, despite multiple opportunities provided. The assessing officer observed that while the assessee claimed to have submitted invoices along with bank account statements, only the bank account statements were actually provided. This discrepancy raised concerns about the substantiation of claims regarding purchases made from various parties. The judgment highlighted that the assessing officer did not have access to the invoices crucial for the assessment process.

The court, after considering the arguments presented, set aside the impugned order dated 28.03.2024 on the condition that the petitioner pays a sum of Rs. 30,000/- as costs to the Adyar Cancer Institute, Chennai, within 15 days. The petitioner was granted a 15-day period to submit the invoices and any other necessary documents. The assessing officer was directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and issue a fresh assessment order within three months from the receipt of additional documents. The writ petition was disposed of based on these terms, and the connected miscellaneous petitions were closed.