2024 (11) TMI 247 - HC - Income Tax

Unsecured loan received u/s 68 - ignorance to reply filed by the petitioner - HELD THAT - As it is not in dispute between the parties that the petitioner filed the reply within the time granted by the respondent AO. It is true that the petitioner has sought further time to file the remaining information which was in process of being collected by the petitioner. AO ignoring the reply filed by the petitioner passed the impugned assessment order stating that the petitioner has not complied with the show cause notice. The respondent AO has also not considered the detailed reply filed by the petitioner. The impugned assessment order is quashed and set aside and the matter is remanded back to the AO to pass a fresh de novo order.

Summary

Issues:
Petition to quash assessment order and demand notice for Assessment Year 2015-16 due to non-consideration of reply to show cause notice. Compliance with show cause notice and assessment order.

Analysis:
The petitioner filed a petition under Article 227 of the Constitution of India seeking to quash the assessment order and demand notice for Assessment Year 2015-16. The petitioner contended that despite filing a reply to the show cause notice-cum-draft assessment order, it was not considered by the Assessing Officer. The petitioner had initially not filed the return of income under Section 139(1) of the Income Tax Act, 1961 for the said assessment year. Subsequently, upon receiving a notice under Section 148 of the Act, the petitioner responded by filing the return of income and providing details as requested by the Assessing Officer. The petitioner also furnished details regarding the purchase of immovable property out of a secure loan.

The Assessing Officer issued a show cause notice calling for an explanation regarding an unsecured loan received by the petitioner. The petitioner responded within the stipulated time frame by providing a detailed reply justifying why the proposed addition under section 68 of the Act should not be made. However, the Assessing Officer, in the assessment order dated 11.03.2022, noted non-compliance by the petitioner with the show cause notice, despite the petitioner's submission of a detailed reply within the specified time limit.

The petitioner argued that the Assessing Officer should have considered the reply before passing the assessment order and requested the matter to be remanded for a fresh assessment order. On the other hand, the respondent contended that the petitioner failed to provide further information within the extended period, leading to the issuance of the assessment order. The respondent highlighted that the petitioner did not attach supporting documentary evidence with the reply dated 28.02.2022.

After hearing both parties, the Court found that the petitioner had indeed filed a reply within the time granted by the Assessing Officer. It was acknowledged that the petitioner sought additional time to collect remaining information, which was not considered by the Assessing Officer. Consequently, the Court quashed the assessment order and remanded the matter back to the Assessing Officer for a fresh assessment order considering the petitioner's reply dated 28.02.2022. The Assessing Officer was directed to complete this process within 12 weeks from the date of receipt of the Court's order. The petition was disposed of, and interim relief was vacated.