2024 (8) TMI 1300 - HC - Income Tax

Two separate assessment orders on best judgment against assessee husband and wife - non-receipt of notices issued by the Income Tax Department - HELD THAT - It follows that the respective petitioner disclosed the entire income, including the entire alleged agricultural income. The reason for issuance of the assessment orders is the failure of the respective petitioner to submit documents to substantiate that the income for which exemption was claimed was indeed agricultural income. Petitioner has placed on record an additional typed set in each writ petition and such additional typed set contains alleged purchase bills with regard to alleged supplies by the respective petitioner. The said additional typed set also contains bank account statements to corroborate alleged receipts against the purchase bills. On account of non submission, none of these documents could be considered by the assessing officer. Although we are not wholly convinced with the explanation regarding non-receipt of notices issued by the Income Tax Department, the fact remains that the entire alleged agricultural income of the respective petitioner was added to the returned income to arrive at the respective petitioner's liability. This was done without considering the genuineness or validity of documents produced now by the respective petitioner to substantiate that said income is agricultural. If such documents are genuine and valid, there would be miscarriage of justice. Solely for the purpose of providing an opportunity to the respective petitioner to place those documents before the assessing officer for consideration, inclined to interfere with the orders impugned herein. In the facts and circumstances, the respective petitioner should be put on terms so as to ensure that such laxity is penalised. Respective assessment order and the penalty order under Sections 270A and 271AAC(1) are quashed. Since the respective petitioner was also directed to pay a penalty for non submission of responses to the notices u/s 142(1) the said penalty shall be paid as a precondition for fresh assessment. The petitioners are directed to pay a sum of Rs. 40,000/- each as penalty within a maximum period of two weeks.

Summary

Issues:
Challenging assessment orders on best judgment basis; Non-receipt of notices and show cause notices; Failure to provide documents for agricultural income exemption; Validity of assessment orders and penalty; Quashing of assessment and penalty orders; Direction for fresh assessment.

Analysis:
The case involves two writ petitions filed by a husband and wife challenging separate assessment orders issued on a best judgment basis. The petitioners, claiming to be agriculturists, assert that they filed income tax returns periodically, but the assessments for the year 2020-2021 were selected for scrutiny. The petitioners allege non-receipt of notices and show cause notices, leading to the issuance of assessment orders. The petitioners argue that they disclosed their entire income, including agricultural income, but failed to provide documents supporting their entitlement to exemption for the agricultural income.

The counsel for the petitioners argues that the impugned assessment orders were issued due to the lack of documents proving the agricultural income exemption claimed. He contends that given the opportunity, the petitioners could demonstrate the legitimacy of the exemption. On the other hand, the Senior Standing Counsel submits that the petitioners were provided multiple opportunities and that there is proof of notice delivery via email, as permitted under Section 282 of the Income Tax Act.

In one of the petitions, the assessment order recorded the total income and added gross agricultural receipts to compute the tax liability due to the petitioner's failure to respond to scrutiny notices and provide supporting documents. Similarly, in the other petition, the agricultural income was added to the returned income as no substantiating documents were provided. The court notes that the petitioners disclosed their entire income but failed to submit documents to prove the agricultural income exemption claimed.

The court acknowledges the petitioners' explanation regarding non-receipt of notices but emphasizes that the entire alleged agricultural income was added to the returned income without considering the newly submitted documents. To prevent a miscarriage of justice, the court decides to quash the assessment and penalty orders, directing the petitioners to pay a penalty for non-submission of responses. The assessing officer is instructed to conduct a fresh assessment within a specified timeframe, provided the petitioners cooperate fully.

In conclusion, the court quashes the assessment and penalty orders, directing the petitioners to pay a penalty and cooperate for a fresh assessment. The court emphasizes the importance of penalizing laxity and ensuring timely conclusion of the assessment proceedings upon remand. The writ petitions are disposed of without costs, and connected miscellaneous petitions are closed.