2023 (5) TMI 1117 - HC - Income Tax

Reopening of assessment - order u/s 148A(d) - Appeal against appealable order - Single Bench had dismissed the writ petition on the ground that during the pendency of the writ petition, an order under Section 147 passed, which is an appealable order - HELD THAT - It is true that the assessee had filed the writ petition only on 16th March, 2023. However, in the interregnum, the Assessing Officer has not passed the order u/s 147 - such an order was passed during the pendency of the writ petition presumably on the ground that no interim order was in force in the writ petition. The opportunity afforded at the first instance should be an effective opportunity because the power of reopening of an assessment is a power, which is to be sparingly used for adequate reasons. Therefore, we are convinced to hold that there has been violation of principles of natural justice. Appeal is allowed and the order passed in the writ petition is set aside and the writ petition is allowed and the order passed u/s148A(d) and the assessment order dated 22nd March, 2023 are set aside and the matter stands restored to the file of the respondents/Assessing Officer at the stage of the show-cause notice under Section 148A(b). Assessee is directed to submit a comprehensive reply enclosing all documents in support of his claim and the Assessing Officer shall redo the process in accordance with law.

Summary

Issues involved:
The appeal against the order under Section 148A(d) of the Income Tax Act, 1961, challenge of the dismissal of the writ petition, violation of principles of natural justice in the decision-making process.

Summary:

Issue 1: Order under Section 148A(d) of the Income Tax Act, 1961
The appellant appealed against the order under Section 148A(d) of the Income Tax Act, 1961, dated 30th March, 2022, challenging the dismissal of the writ petition. The Court found a fundamental error in the decision-making process as the source of information for reopening proceedings was not disclosed to the assessee. The Assessing Officer did not provide an effective opportunity for the assessee to present their case, violating principles of natural justice.

Issue 2: Violation of Principles of Natural Justice
The Court held that the time granted to the assessee to submit a reply was inadequate, especially when the source of information for reopening proceedings was not disclosed. The Court emphasized that the power of reopening an assessment should be sparingly used for adequate reasons. Due to the violation of principles of natural justice, the order under Section 148A(d) of the Act and the assessment order were set aside, and the matter was restored to the Assessing Officer for further proceedings.

Conclusion:
The appeal was allowed, and the order under Section 148A(d) of the Act was set aside. The assessee was directed to submit a comprehensive reply with all supporting documents, and the Assessing Officer was instructed to redo the process in accordance with the law. The Assessing Officer was also directed to provide relevant documents related to the show-cause notice and afford a personal hearing to the authorized representative of the assessee. No costs were awarded, and urgent certified copies of the order were to be provided to the parties upon compliance with legal formalities.