2024 (10) TMI 1369 - HC - Income Tax

Penalty u/s 271AAC(1) - no notice u/s 142 1 issued - HELD THAT - Notice u/s 142 1 of the Act was issued to the petitioner, the first respondent has not stated as to when the said notice was delivered/served upon the petitioner. The impugned notice, proceedings culminating in the impugned order cannot be said to have been done after providing sufficient and reasonable opportunity to the petitioner thereby violating principles of natural justice and consequently the impugned order deserves to be set aside by adopting justice oriented approach and to provide one more opportunity to the petitioner to submit his reply to the said notice u/s 142 of the Act and with the direction to the respondents to proceed further in accordance with law. It is to be stated that since indulgence is being shown in favour of the petitioner after a lapse of almost four years from the date of the impugned order, in the event, the first respondent passes an order against the petitioner after remand by virtue of this order, the first respondent would be entitled to claim interest on the amount in terms of the Notice of Demand.

Issues:
Challenge to assessment order under section 143(3) of the Income Tax Act for the Asst. Year 2017-18, Challenge to penalty order under section 271AAC(1) of the Income Tax Act for the same year.

Analysis:
The petitioner sought relief by challenging the assessment order and penalty order for the Asst. Year 2017-18 under the Income Tax Act. The petitioner argued that the impugned orders lacked reasoning and violated principles of natural justice by not providing sufficient opportunity to respond. The petitioner emphasized the absence of details regarding the service of notice under Section 142[1] of the Act. The court noted the lack of specifics in the impugned order regarding the notice's delivery to the petitioner, leading to a violation of natural justice. The court allowed the petition, setting aside the impugned order and remitting the matter back to the first respondent for reconsideration in accordance with the law. The petitioner was granted liberty to submit a response along with documents, with a provision for interest on the amount if the first respondent passes an order against the petitioner after reconsideration.

The learned counsel for the petitioner withdrew the appeal filed before the first appellate Authority related to the impugned order. The respondents contended that the petition was belated, filed almost four years after the impugned order, and should be dismissed due to delay and laches. The court observed that the impugned order did not provide details about the service of notice to the petitioner, raising concerns about the lack of opportunity for the petitioner to respond. The court held that the impugned order failed to comply with principles of natural justice, necessitating its setting aside. Despite the delay in filing the petition, the court adopted a justice-oriented approach, granting the petitioner another opportunity to respond to the notice under Section 142 of the Act. The court directed the respondents to proceed further in accordance with the law and reserved the right for the first respondent to claim interest on the amount if an order is passed against the petitioner after reconsideration.

In conclusion, the court allowed the petition, set aside the impugned order, and remitted the matter back to the first respondent for fresh consideration. The petitioner was given the liberty to submit a response, and the first respondent was entitled to claim interest if an adverse order is passed post-reconsideration. The judgment focused on upholding principles of natural justice and ensuring a fair opportunity for the petitioner to present their case.

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