2022 (7) TMI 1161 - HC - Income Tax

Validity of re-assessment orders issued u/s 143(3)/ 147 r.w.s.144B - as argued impugned orders have been passed in violation of the principles of natural justice, as the Respondents have not taken into consideration the material on record and the replies and documents filed by the Petitioner - Petitioner did not come to know of the show cause notice, as she did not get the real time alert, as is mandatorily required under Section 144B(7)(ii) - HELD THAT - A perusal of the impugned assessment order reveals that though the mutual funds are held in the joint name of the assessee and her husband, yet the payments of the same have been made from the bank accounts held jointly by the assessee and her husband in one of bank accounts the first name is that of the petitioner-assessee. It is also alleged in the impugned order that, the source of deposit in all these bank accounts does not indicate whether such deposits has been made by her husband or by the assessee, out of their independent source of income . Consequently, the dispute involved in the present matters is essentially factual in nature. Moreover, appeals against the impugned assessment orders have already been filed under Section 246A by the Petitioner before the appropriate Authority. Consequently, this Court is of the view that it would be appropriate if the petitioner raises all her contentions and submissions before the Appellate Authority. Accordingly, the present writ petitions along with applications stand disposed of with liberty to the petitioner to raise all her contentions and submissions before the Assessing Officer.

Summary

Issues:
Challenging re-assessment orders under Income Tax Act for Assessment Years 2016-17 and 2017-18 based on violation of natural justice principles, denial of right to reply, reliance on Multiyear NMS data without independent investigation, and factual dispute regarding joint investments.

Analysis:

The petitioner filed writ petitions challenging re-assessment orders issued under the Income Tax Act for the Assessment Years 2016-17 and 2017-18. The petitioner argued that the orders violated the principles of natural justice as the respondents did not consider the material on record and the replies filed by the petitioner. The petitioner contended that the show cause notices proposing significant additions to income were issued with insufficient time for response, effectively denying the right to reply. Citing the decision of the Bombay High Court in Vodafone India Ltd. v. Union of India, the petitioner emphasized the importance of due process and adequate time for response.

The petitioner also raised concerns about not receiving real-time alerts for show cause notices as mandated under the Act, which hindered the timely filing of replies or requesting a personal hearing. Furthermore, the petitioner argued that the respondents solely relied on Multiyear NMS data without conducting an independent investigation. The petitioner highlighted that the investments in mutual funds, subject to addition in income, were actually made by the petitioner's husband, who has a history of tax assessments and income filings. The petitioner asserted that proper inquiries would have revealed that the investments were joint party transactions made by the husband, with the petitioner being a second holder of the securities.

However, the assessment order indicated that while the mutual funds were jointly held, the payments were made from bank accounts held jointly by the petitioner and her husband, with the first name in one account being that of the petitioner. The order raised doubts about the source of deposits in these accounts, whether from the husband or the petitioner's independent income. This factual dispute formed a crucial aspect of the case.

The court noted that appeals against the assessment orders were already filed by the petitioner before the appropriate authority. Consequently, the court deemed it appropriate for the petitioner to present all contentions and submissions before the Appellate Authority. The court disposed of the writ petitions, granting the petitioner the liberty to raise all arguments before the Assessing Officer, without commenting on the merits of the controversy, thus leaving the rights and contentions of all parties open for further proceedings.