2023 (1) TMI 416 - HC - Income Tax

Reopening of assessment u/s 147 - Denial of natural justice - As brought to the notice of this Court that the assessee had filed a reply to the show cause notice and the impugned order has been passed without considering the same and subsequent to passing of the impugned order, the notice u/s 148 to the writ petition has been issued to the petitioner - HELD THAT - On the ground that the impugned order has been passed without considering the reply of the petitioner, the same is liable to be set aside and consequently, the notice issued under Section 148 of the Income Tax Act, 1961 also requires to be set aside. The order of the AO passed u/s 148A(d) to the writ petition is hereby set aside. Consequently, the notice issued under Section 148 to the writ petition is also set aside. The petitioner is permitted to resubmit his reply dated 23.03.2022 to the Assessing Authority within a period of 15 days from today.

Issues:

1. Validity of the order passed under Section 148A(d) of the Income Tax Act, 1961.
2. Consideration of the petitioner's reply to the show cause notice.
3. Compliance with legal procedures in reopening the assessment for the assessment year 2018-19.

Analysis:

1. The High Court addressed the issue of the validity of the order passed under Section 148A(d) of the Income Tax Act, 1961. The petitioner challenged the order dated 31.03.2022, which reopened the assessment of tax for the assessment year 2018-19. The impugned order was based on the Assessing Officer's decision that the petitioner did not respond to the show cause notice within the specified deadline. However, it was revealed that the petitioner had indeed submitted a reply dated 23.03.2022 before the deadline. The Court found that the impugned order was passed without considering the petitioner's response, leading to a violation of procedural fairness.

2. The Court examined the issue of whether the petitioner's reply to the show cause notice was duly considered before passing the impugned order. The respondent's counsel acknowledged that the petitioner had submitted a reply, which was not taken into account during the decision-making process. This failure to consider the petitioner's response was a crucial flaw in the assessment process, warranting the setting aside of the impugned order and the subsequent notice issued under Section 148 of the Income Tax Act, 1961.

3. Furthermore, the Court emphasized the importance of complying with legal procedures in reopening assessments under the Income Tax Act. Given that the impugned order was rendered without due consideration of the petitioner's reply, the Court deemed it necessary to set aside both the order under Section 148A(d) and the notice issued under Section 148. The petitioner was granted the opportunity to resubmit the reply dated 23.03.2022 to the Assessing Authority within 15 days. The Assessing Authority was instructed to review the petitioner's case and make appropriate decisions under the provisions of Section 148A(d) of the Income Tax Act, 1961.

In conclusion, the High Court set aside the impugned order and the notice under Section 148, emphasizing the importance of procedural fairness and compliance with legal requirements in tax assessments. The judgment underscored the need for authorities to consider all relevant submissions before making decisions that impact taxpayers' rights and obligations under the law.

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