2022 (8) TMI 913 - HC - Income Tax

Validity of order passed u/s.144 r/w 144B - non granting petitioner an opportunity of personal hearing and without considering the legal effect of petitioner having emerged out of corporate insolvency resolution process under the provisions of the Insolvency and Bankruptcy Code - HELD THAT - In respect of notices issued to petitioner under section 148 of the Act for A.Y. 2013-14 to A.Y. 2017-2018, the AO shall deal with the objections dated 10th December, 2021 of petitioner before proceeding with the assessment proceedings. AO shall give petitioner an opportunity of personal hearing before passing the order disposing off the objections. Notice for personal hearing shall be given to petitioner at least seven working days in advance before passing such order. A list of judgments, if any, sought to be relied on by the Assessing Officer shall be given to petitioner along with the notice of the personal hearing. In the event the Assessing Officer decides to reject the objections of petitioner, assessment proceedings shall be commenced not before four weeks after serving the order disposing off the objections on petitioner. The orders that may be passed by the Assessing Officer as above shall be speaking orders dealing with each and every submission/ contention/objection of petitioner. The same shall be done within a period of six weeks from the date of uploading of this Order. Petitioner is at liberty to file further submissions/objections, if any, before respondents.

Issues:
1. Opportunity of personal hearing not granted under Income Tax Act for A.Y. 2018-19
2. Legal effect of emerging from corporate insolvency resolution process not considered
3. Setting aside Demand Notices dated 19th January, 2022 and 30th April, 2021
4. Dealing with objections under section 148 of the Act for A.Y. 2013-14 to A.Y. 2017-2018
5. Ensuring speaking orders addressing all submissions/objections within six weeks

Analysis:

1. The judgment highlighted that the orders passed under sections 270A and 144 r/w 144B of the Income Tax Act for A.Y. 2018-19 lacked the grant of an opportunity of personal hearing to the petitioner. Additionally, the legal effect of the petitioner emerging from the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016, was not considered. Consequently, the court set aside these orders and remanded the matters back to the Assessing Officer, emphasizing the necessity of providing the petitioner with a personal hearing before the final order is passed. The Assessing Officer was directed to provide a notice for the personal hearing at least seven working days in advance and share a list of judgments to be relied upon during the hearing.

2. The Demand Notices issued on 19th January, 2022, and 30th April, 2021 were also set aside in alignment with the lack of opportunity for personal hearing and the failure to consider the petitioner's emergence from the insolvency resolution process. This decision aimed to ensure procedural fairness and adherence to legal requirements in the assessment process.

3. Regarding the notices issued to the petitioner under section 148 of the Act for A.Y. 2013-14 to A.Y. 2017-2018, the judgment directed the Assessing Officer to address the objections raised by the petitioner before proceeding with the assessment proceedings. It mandated that the petitioner be granted a personal hearing before the order disposing of the objections is passed, with a notice provided at least seven working days in advance. The Assessing Officer was also required to share a list of judgments to be relied upon during the hearing and, in case of objection rejection, commence assessment proceedings not earlier than four weeks after serving the order to the petitioner.

4. The judgment emphasized the necessity of the orders to be passed by the Assessing Officer being speaking orders, comprehensively addressing each submission, contention, or objection raised by the petitioner. This requirement aimed to ensure transparency and clarity in the decision-making process, with a strict timeline of six weeks provided for the completion of these speaking orders from the date of the judgment's uploading.

5. The petitioner was granted the liberty to file further submissions or objections before the respondents, ensuring the opportunity for continued engagement in the assessment process. Additionally, the court clarified that it had not expressed any view on the merits of the case, keeping all contentions of both sides open for future proceedings.

6. Ultimately, the petition was disposed of, concluding the legal proceedings while ensuring procedural fairness, adherence to legal requirements, and the protection of the petitioner's rights throughout the assessment process.

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