2020 (3) TMI 1116 - HC - Income Tax

Unexplained cash purchase - information received from the Customs Authorities - notice was issued for enhancement of income and served on the AR asking the assessee to give his explanation within 15 days, however, till date the assessee neither submitted the explanation nor requested for more time to submit the explanation - main contention of the learned counsel for the petitioner is that the second respondent, without applying his mind independently, has issued the impugned notice relying on the report of the Assessment Officer, which is arbitrary and illegal and on this score alone, the impugned notice is liable to be quashed - HELD THAT - Considering the facts and circumstances of the case and having regard to the submissions now made by the learned counsel on either side, this Court permits the petitioner to submit the necessary objections to the second respondent, within a period of two weeks from the date of receipt of a copy of this order. On receipt of the same, the 2nd respondent shall consider the same and pass appropriate orders independently applying his mind, on merits and in accordance with law, after providing an opportunity of personal hearing to the petitioner, within a period of four weeks thereafter.

Summary

Issues: Challenging notice of unexplained cash purchase determination based on Customs Authorities' information, lack of independent inquiry by Assessing Officer, legality of notice issuance without independent application of mind.

In the present case, the petitioner challenged a notice issued by the 2nd respondent regarding unexplained cash purchases, amounting to ?1,14,97,899, based on information from Customs Authorities. The petitioner contended that the Assessing Officer did not conduct an independent inquiry and relied solely on the report, deeming the notice arbitrary and illegal. Citing a previous court decision, the petitioner argued that such notices without independent assessment are unsustainable. The respondent, however, assured that if the petitioner submits objections, they would be duly considered, and orders passed independently and in accordance with the law.

The High Court, after considering the arguments on both sides, permitted the petitioner to file fresh objections within two weeks. Upon receipt, the 2nd respondent was directed to review the objections, pass orders independently, and provide a personal hearing to the petitioner within four weeks. The Court disposed of the writ petition accordingly, with no costs incurred.