2020 (12) TMI 989 - HC - Income Tax

Validity of order u/s 144 - ex parte assessment order - Violation of principles of natural justice as not affording sufficient opportunity to the petitioner to raise all his contentions available to him under law - HELD THAT - As seen from the impugned assessment order passed under Section 144 of the Income Tax Act, 1961, the petitioner has not participated in the said proceedings and the order is in the nature of ex parte assessment order. The grounds raised by the petitioner, namely, the cash amount deposited under the Pradhan Mantri Garib Kalyan Yojana Scheme, 2016, on 31.03.2017 has not been taken into consideration under the impugned assessment order. Contention of the petitioner that since he has has availed the benefit of Pradhan Mantri Garib Kalyan Yojana Scheme, 2016, the cash amount cannot be treated as an unexplained money under Section 69 (A) has not been considered by the respondent in accordance with law. Similarly, the contention of the petitioner that amendment made to Section 115BBE in the year 2020, will not apply to the assessment year 2017-2018, has also not been considered by the respondent in the impugned assessment order. The respondent has also not considered the petitioner's contention in this Writ Petition that the amendment to Section 143 (3A) of the Income Tax Act, 1961, was proposed only in the Budget 2020 to include Section 144 proceedings also under the e-proceedings and therefore, for the assessment year 2017-2018, the same is not attracted. Though in the counter affidavit, the respondent has given reasons for each and every contention of the petitioner in this writ petition, the same is not reflected in the impugned assessment order. no personal hearing has been afforded to the petitioner. It is also not clear that whether such an opportunity was given by the respondent to the petitioner or not. All these aforementioned factors will clearly indicate that the respondent has violated the principles of natural justice while passing the impugned assessment order by not affording sufficient opportunity to the petitioner to raise all his contentions available to him under law. Thus the impugned assessment order is hereby quashed and the matter is remanded back to the respondent for fresh consideration.

Summary

Issues:
Challenge to re-assessment under Section 144 of the Income Tax Act, 1961 for the assessment year 2017-2018 based on violation of principles of natural justice, lack of personal hearing, failure to consider benefits under Pradhan Mantri Garib Kalyan Yojana Scheme, 2016, and incorrect application of amendments to the Income Tax Act.

Analysis:
The petitioner challenged the re-assessment order on various grounds, including the violation of natural justice principles by not providing sufficient opportunity and not granting a personal hearing as required under Section 144 of the Income Tax Act, 1961. The petitioner claimed that the cash deposit was made under the Pradhan Mantri Garib Kalyan Yojana Scheme, 2016, and should not be treated as unexplained money under Section 69A. Additionally, the petitioner argued that the respondent failed to consider the amendment to Section 115BBE, which was not applicable to the assessment year 2017-2018. The petitioner also contended that the respondent lacked authority to initiate re-assessment proceedings under Section 144 without proper legal basis.

In response, the respondent stated that despite the petitioner's admission of a cash deposit under the scheme, there were other unexplained deposits for which no explanation was provided. The respondent issued notices and show cause notices to the petitioner, but the petitioner failed to respond, leading to the ex parte assessment order under Section 144. The respondent argued that the amendment to Section 115BBE should be applied retrospectively and that the petitioner's contentions regarding amendments and e-proceedings were not valid.

The Court noted that the petitioner's arguments were not considered in the assessment order, and no personal hearing was provided, indicating a violation of natural justice principles. The Court found that the respondent failed to address the petitioner's claims regarding the benefits under the scheme and the applicability of amendments correctly. Consequently, the Court quashed the assessment order and remanded the matter to the respondent for fresh consideration, directing the respondent to provide the petitioner with an opportunity for a personal hearing and to address all contentions within a specified timeframe.

In conclusion, the Court ruled in favor of the petitioner, setting aside the assessment order and ordering a fresh consideration by the respondent with proper adherence to principles of natural justice and legal provisions, ensuring the petitioner's right to be heard and all contentions to be addressed comprehensively.