2023 (4) TMI 956 - HC - Income Tax

Reopening of assessment u/s 147 - unexplained investments under Section 69 - initiating penalty proceedings under Section 271(1)(c) - assessee had neither filed any return of income nor offered any income for taxation in respect of the transaction regarding purchase of immovable property, the assessee had not replied to the notices issued under Section 142(1) - HELD THAT - Petitioner did file a return of income in response to the notice issued under Section 148 of the Act and had also furnished appropriate responses and material pursuant to the notices issued under Section 142(1) by the Jurisdictional A.O.. After the case of the Petitioner was transferred to the A.O. of Ward 3(3)(1), Mumbai dealing with the international taxation, the information which was already sought for and submitted, was called yet again. Revenue has not been successful in satisfying us as to whether the information which was required to be furnished pursuant to the notices issued by the A.O. of Ward 3(3) (1), Mumbai, dealing with the international taxation was not already on record and if it was then the same ought to have been considered. An inadvertent error committed by the Petitioner in reflecting that the return of income had been filed under the category u/s 119(2)(b) instead of selecting the option u/s 148 could have been treated to be a return validly filed by invoking the provisions of Section 292B of the Act especially when the Petitioner claims that the mistake was brought to the notice of the concerned A.O. at the appropriate stage. Matter requires to be reconsidered by the concerned A.O. by treating the return of income filed by the Petitioner as a return of income filed in terms of the notice under Section 148 of the Act and treat the said return as valid. We also direct that the material on record be considered and if there is any other information which is required by the A.O. the same may be called for specifically from the Petitioner. Fresh orders be passed in accordance with law preferably within three months from today.

Summary

Issues Involved:
The judgment involves challenges to an assessment order under the Income Tax Act, 1961, specifically regarding unexplained investments and penalty proceedings.

Assessment Order Challenge:
The petitioner challenged the assessment order dated 29th April, 2022, which added an amount to the total income as unexplained investments under Section 69 of the Act and initiated penalty proceedings under Section 271(1)(c) of the Act. The primary grounds of challenge were factual inaccuracies in the order, including the petitioner's alleged failure to file a return of income or respond to notices. The petitioner contended that the return was filed in response to a notice under Section 148 of the Act, albeit with a technical error in mentioning the section. The petitioner also argued that all required details were furnished in response to notices issued under Section 142(1) of the Act, despite the AO's assertion of non-compliance.

Response to Notices:
The petitioner's counsel highlighted that the petitioner did respond to the notices issued by the Assessing Officer, providing bank statements, salary slips, and property documents as requested. However, the AO proceeded to issue further notices and eventually passed the impugned assessment order without considering the submissions made by the petitioner. The petitioner's submissions and responses were allegedly disregarded in the final assessment.

Judicial Review and Decision:
Upon review, the court found that the petitioner had indeed filed a return of income in response to the notice under Section 148 of the Act and had complied with requests for information under Section 142(1). The court noted that the AO's insistence on a revised return under Section 148 was not justified, considering the petitioner's initial filing. The court directed the AO to reconsider the matter, treating the filed return as valid and considering all relevant information already on record. The court quashed the assessment order, demand notice, and penalty proceedings, directing fresh orders to be passed within three months.

Conclusion:
Ultimately, the writ petition challenging the assessment order was disposed of in favor of the petitioner, emphasizing the importance of proper consideration of filed returns and submitted information in assessment proceedings under the Income Tax Act, 1961.