2022 (5) TMI 301 - HC - Income Tax

Validity of reopening of assessment u/s 147 - petitioner states that the impugned notices are void ab initio as they have been issued in the name of a non-existing partnership firm - Denial of natural justice - Petitioner had not been given an opportunity either to deal with or to respond to the show cause notices - HELD THAT - Having heard the learned counsel for the parties, this Court is of the view that even if the submission of learned counsel for the respondent is accepted, then also the impugned orders are liable to be set aside as the Petitioner had not been given an opportunity either to deal with or to respond to the show cause notices dated 28th March, 2022 inasmuch as it had been issued after the date and time of compliance had expired. Consequently, the impugned orders are set aside on the ground of being violative of the principle of natural justice and the matter is remanded back to the Assessing Officer for fresh adjudication. The Petitioner shall file its response to the show cause notices dated 28th March, 2022 within four weeks.

Summary

Issues:
Challenging reassessment notices under Income Tax Act, 1961 for multiple assessment years due to incorrect entity name, violation of natural justice in issuance of notices, and remand for fresh adjudication.

Analysis:
1. The writ petitions challenged reassessment notices issued under Section 148 of the Income Tax Act, 1961 for the assessment years 2015-16, 2016-17, and 2017-18, along with subsequent assessment orders. The petitioner contended that the notices were void as they were issued in the name of a non-existing partnership firm converted into a limited company. Scrutiny assessments were already conducted for the assessment year 2012-13 for both entities.

2. The petitioner argued that the show cause notices were digitally signed after the fixed compliance deadline, rendering them unjust. Moreover, the income allegedly escaping assessment had been declared by the converted company. On the contrary, the Revenue contended that the PAN of the partnership firm was active during notice issuance, indicating continued transactions under the old entity.

3. The Court acknowledged the Revenue's argument but emphasized that the petitioner was not given a fair chance to respond to the notices, violating natural justice principles. Consequently, the impugned orders were set aside, and the matter was remanded to the Assessing Officer for fresh adjudication.

4. The Court directed the petitioner to submit specific documents, including export and import-related records and interest income details, for cross-verification with departmental data. The Assessing Officer was instructed to schedule a hearing, issue a reasoned order, and decide the matter within the legal framework after granting the petitioner a proper opportunity to present their case.

5. Ultimately, the writ petitions and related applications were disposed of with the outlined directions for a fair and thorough reassessment process, ensuring compliance with natural justice principles and legal procedures.