2024 (7) TMI 973 - HC - Income Tax

Validity of assessment order passed - materials placed on record by the petitioner were not duly taken into consideration - proceedings initiated u/s 148 assessee did not file the return of income - undisclosed interest income - By referring to Section 69A, assessee contends that the said provision is attracted only if the source of income is not adequately explained by the assessee, but assessee clearly indicated the source of income and annexed documents to corroborate the same HELD THAT - As petitioner stated categorically that the amounts specified in the notice u/s 142(1) were received as interest income. The petitioner annexed an income computation statement and the income tax paid challan for the relevant assessment year. Such challan has also been placed on record and indicates that a sum was paid by way of self assessment tax for assessment year 2019-20. The petitioner further attached documents to the reply dated 12.12.2023 and these documents include copies of the relevant sale deed and the bank account statements. On examining the impugned assessment order, it appears that the assessing officer took note of the sale deed relating to the sale of property. The contention of the petitioner with regard to interest income having accrued from fixed deposits was also noticed. However, the income tax challan and the TDS were not taken into consideration. Also it should be noticed that the assessee failed to reply to the show cause notice or file the return of income even after a notice under Section 148 was issued. In these circumstances, it is appropriate that the matter is remanded by imposing costs on the petitioner. Impugned assessment order is set aside on condition that the petitioner pays costs of Rs. 15,000/- to the Tamil Nadu State Legal Services Authority within two weeks from the date of receipt of a copy of this order. Within the said period, the petitioner is permitted to reply to the show cause notice. In order to enable the petitioner to upload such reply, the respondents are directed to provide access to the portal.

Summary

Issues:
Challenge to assessment order due to petitioner's materials not considered, failure to file return of income for assessment year 2019-20, initiation of proceedings under Section 148 of the Income Tax Act, 1961, petitioner's responses to notices under Section 142(1), petitioner's explanation of interest income from property sale and fixed deposits, dissatisfaction with petitioner's replies, failure to respond to show cause notice, legal arguments based on Section 69A of the I-T Act, reference to relevant case law, multiple opportunities provided to petitioner, non-consideration of income tax challan and TDS, need for remand and imposition of costs.

Analysis:
The judgment concerns a writ petition challenging an assessment order dated 15.02.2024 on the grounds of petitioner's materials not being duly considered. The petitioner did not file the return of income for the assessment year 2019-20, leading to proceedings initiated under Section 148 of the Income Tax Act, 1961. The petitioner responded to notices under Section 142(1) by explaining the income earned from selling a property and investing the proceeds in fixed deposits, supported by various documents like income computation statements, bank statements, and sale deed copies.

The petitioner's counsel argued that the source of income was adequately explained, citing Section 69A of the I-T Act and presenting relevant case law. However, the respondent pointed out that despite multiple opportunities and notices, the petitioner did not sufficiently clarify the tax remittance on the interest income. The assessing officer's failure to consider the income tax challan and TDS was noted, along with the petitioner's non-response to the show cause notice and the absence of a filed return of income even after a Section 148 notice.

Upon reviewing the petitioner's replies and the assessment order, it was observed that while certain aspects were acknowledged by the assessing officer, crucial documents like the income tax challan and TDS were overlooked. Consequently, the judgment set aside the assessment order with the condition that the petitioner pays costs to the Tamil Nadu State Legal Services Authority and responds to the show cause notice within two weeks. The assessing officer was directed to provide a reasonable opportunity for a fresh assessment order within three months of receiving the petitioner's reply, emphasizing the need for a remand and cost imposition.

In conclusion, the writ petition was disposed of with specific directives for the petitioner to address the show cause notice, pay costs, and for the assessing officer to conduct a fresh assessment within the specified timeline.