2024 (8) TMI 756 - HC - Income Tax

Validity of reassessment proceedings - non filling responses against notices issued - as argued old E-mail ID was inaccessible and therefore, the notices issued to the petitioner for the respective Assessment Years went unnoticed which have culminated in the impugned Assessment Orders - HELD THAT - As petitioner deserves a fair chance to address its grievances regarding the reopening of the assessment under Section 147 r.w.s.144B of the Income Tax Act, 1961, for the partnership firm, as it has purportedly closed down its business w.e.f. 01.04.2014. The petitioner will have to establish whether the huge deposits made in the petitioner's bank account have been brought into the books of accounts under the name of the deponent. This would require a detailed consideration. However, considering the fact that the deponent has been negligent in not responding to the notices issued under Section 148A(b) of the Income Tax Act, 1961 and thereafter to the orders passed under Section 148A(d) of the Income Tax Act, 1961, we are inclined to quash the impugned Assessment Orders and remit the case back to the first respondent to pass fresh orders. Direct the petitioner to pay Rs. 25,00,000/- each for the respective Assessment Years, and file a reply the notices issued under Section 148A(b) within a period of 4 months from the date of receipt of a copy of this order.

Summary

Issues:
Challenge of impugned Assessment Orders for two Assessment Years, transfer of business from partnership firm to sole proprietorship, failure to respond to notices under Income Tax Act, justification of tax liability, quashing of Assessment Orders, directions for fresh assessment.

Analysis:
In these Writ Petitions, the petitioner contested Assessment Orders for the years 2018-2019 and 2019-2020, claiming unawareness of notices issued under the Income Tax Act. The petitioner, a proprietary concern, succeeded a partnership firm and faced substantial tax liabilities. The petitioner argued that the tax assessment was unjustified due to procedural lapses. On the contrary, the respondents contended that notices were duly served through email and postal means. The respondents suggested filing a statutory appeal against the impugned orders. The petitioner highlighted the business nature involving significant cash transactions related to petroleum products, leading to thin margins for tax assessment.

The court acknowledged the petitioner's plea for a fair chance to address grievances regarding the assessment reopening for the partnership firm that ceased operations. The court emphasized the need to verify the substantial deposits in the petitioner's bank account and their accounting under the deponent's name. Despite the petitioner's negligence in responding to notices, the court decided to quash the Assessment Orders and referred the case back for fresh assessment. The court imposed certain conditions on the petitioner, including payment for each assessment year, timely response to notices, cooperation with authorities, and consequences for non-compliance.

The court directed the petitioner to pay specific amounts for each assessment year and respond to notices within a stipulated period. It instructed the tax authorities to expedite the assessment process and emphasized the petitioner's cooperation in providing necessary records. The court warned of consequences if the petitioner failed to comply with the directives, revoking the concessions granted. Ultimately, the court disposed of the Writ Petitions without costs and closed the related Miscellaneous Petitions.