2024 (8) TMI 179 - HC - Income Tax

Invalid Return - Seeking Quashing of impugned order u/s 139(9) - grievance of the petitioner that despite not carrying on any Profession but engaged in a Business, the respondent No.1 has issued the impugned non- speaking and un-reasoned order under Section 139(9) of the IT Act treating the returns filed by the petitioner for the assessment year 2021-22 as INVALID without assigning any reason whatsoever as to why the returns were treated as INVALID. HELD THAT - A perusal of the material on record will indicate that while it is the specific contention of the petitioner that it is involved/engaged in a Profession and was not carrying on any Business, the respondent in the statement of objections, for the first time before this Court, contends that the petitioner was involved/engaged in a Profession. However, the said question/issue as to whether the petitioner was carrying on a Business or engaged in a Profession has neither been adverted to nor addressed in the impugned order at Annexure-D dated 29.12.2022, which is a non-speaking and unreasoned order being violative of principles of natural justice, and the same deserves to be set aside and the matter remitted back to the respondent No.1 for reconsideration afresh in accordance with law by providing one more opportunity to the petitioner to put forth its claim and for a direction to the respondent No.1 to examine the material on record and proceed further in accordance with law. Petition is hereby allowed.

Issues:
1. Quashing of the impugned order under Section 139(9) of the Income Tax Act for the assessment year 2021-22.
2. Determination of whether the petitioner was engaged in a Business or a Profession.
3. Allegation of non-speaking and unreasoned order by the respondent No.1.
4. Violation of principles of natural justice in the impugned order.
5. Remittal of the matter back to the respondent No.1 for reconsideration.

Detailed Analysis:
1. The petitioner sought the quashing of the impugned order dated 29.12.2022 passed by the Assistant Director of Income Tax under Section 139(9) of the Income Tax Act for the assessment year 2021-22. The petitioner contended that despite being engaged in a Business, the respondent treated the returns as INVALID without providing any reason. The petitioner filed a grievance, which was not resolved satisfactorily, leading to the present petition for relief.

2. The petitioner argued that it was engaged in a Business and not a Profession, emphasizing that the tax audit limit applicable was Rs.10,00,00,000 and not Rs.50,00,000 as applicable to a Profession. On the other hand, the respondents contended that the petitioner was involved in a Profession and not a Business, asserting that the upper audit limit of Rs.50,00,000 was not applicable to the petitioner. The issue of whether the petitioner was carrying on a Business or a Profession was crucial to the dispute.

3. The petitioner alleged that the impugned order was non-speaking and unreasoned, failing to provide any justification for treating the returns as INVALID. The lack of reasoning in the order was deemed a violation of principles of natural justice. The Court noted that the question of whether the petitioner was engaged in a Business or a Profession was not addressed in the impugned order, further supporting the contention of a non-speaking and unreasoned order.

4. The Court found that the impugned order was indeed non-speaking and unreasoned, thereby violating principles of natural justice. Consequently, the Court allowed the petition, setting aside the order dated 29.12.2022 and remitting the matter back to the respondent No.1 for reconsideration. The Court directed the respondent to provide the petitioner with a further opportunity to present its claim and to proceed in accordance with the law expeditiously.

5. In conclusion, the Court granted the relief sought by the petitioner, emphasizing the importance of addressing the petitioner's contentions regarding its engagement in a Business rather than a Profession. The judgment highlighted the necessity of reasoned orders in compliance with principles of natural justice, ensuring a fair and just decision-making process in matters concerning income tax assessments.

← Previous Next →