2022 (7) TMI 1318 - HC - Income Tax

Reopening of assessment u/s 147 - violation of the principles of natural justice - issued notice u/s 148A(b) stating that he has information which suggests that income chargeable to tax for the relevant assessment year has escaped the assessment within the meaning of Section 147 - HELD THAT - Order has been passed u/s 148A(b) - as surprising to find that in the said order the officer has furnished information which is running to more than seven paragraphs. This information was not furnished to the assessee at the first instance and what was appended to the notice was only case related information details. This court is convinced that there has been violation of principles of natural justice inasmuch as the appellant was not furnished with full information based on which the assessment was sought to be reopened. The writ appeal as well as the writ petition is allowed. The order under Clause (d) of Section 148 A dated 07.04.2022 is set aside and the matter is remanded to the AO to the position when he issued notice u/s 148A(b). Assessee is directed to take note of the information mentioned in the order dated 07.04.2022 passed under Clause (d) of Section 148A as the basis for reopening and submit their objections within 10 days from the date of receipt of server copy of this order and on receipt of the affidavit of opposition the Assessing Officer shall proceed to complete the assessment in accordance with law. The notice issued under Section 148A of the Act dated 07.04.2022 shall not be enforced.

Summary

Issues:
Challenging an assessment order under the Income Tax Act 1961 for the assessment year 2018-19 on the grounds of violation of principles of natural justice.

Analysis:
The appellant challenged the assessment order passed under the Income Tax Act 1961 for the assessment year 2018-19, alleging a violation of natural justice principles. The Assessing Officer issued a notice under Section 148A(b) of the Act, suggesting that income chargeable to tax had escaped assessment. The appellant contended that they were not provided with the necessary information as stated in the notice. Despite the appellant's response, a second notice was issued, claiming the first notice did not allow the minimum required time for response. The subsequent notice also lacked the essential information and only contained case-related details. The court found a clear violation of natural justice principles as the appellant was not furnished with complete information crucial for the assessment reopening process.

The court allowed the writ appeal and petition, setting aside the order under Section 148A(d) of the Act and remanding the matter to the Assessing Officer to the position when the second notice was issued. The appellant was directed to consider the information in the order dated 07.04.2022 as the basis for reopening and submit objections within 10 days. Upon receiving the opposition affidavit, the Assessing Officer was instructed to proceed with the assessment in compliance with the law. The notice dated 07.04.2022 was deemed unenforceable, and the appellant was urged to cooperate with the assessment proceedings within the specified timeframe.

In conclusion, the appeal and connected application were disposed of in accordance with the court's directions, emphasizing the importance of upholding principles of natural justice in assessment proceedings under the Income Tax Act 1961.