2023 (9) TMI 113 - HC - Income Tax

Adverse Assessment Order - notices issued u/s 142(1) were not accessed as the Chartered Accountant who had the password failed to access the same and inform the petitioner about the same on account of confusion due to outbreak of Covid 19 pandemic - HELD THAT - The notice that were issued under Section 142(1) of the Income Tax Act were during the period when the first wave at its peak and during the period when the second wave had already started. The Impugned Assessment Order has been passed on 26.04.2021 again when the second wave was at its peak. That being the case, the Court is inclined to quash the Impugned Order and the Impugned Demand Notice issued under Section 221(1) of the Income Tax Act and remand the case back to the respondents to pass a fresh order on merits and in accordance with law within a period of eight (8) weeks from the date of receipt of a copy of this order. Petitioner shall cooperate with the respondent by furnishing all the informations called for along with the reply. The impugned order which stands quashed today shall be treated as a Show Cause Notice for the petitioner to respond.

Summary

Issues involved:
The petitioner challenges the Impugned Assessment Order dated 26.04.2021, claiming unawareness of the order due to communication issues during the Covid-19 pandemic. The respondent contends that the petitioner had ample opportunities to respond to notices under Section 142(1) of the Income Tax Act but failed to do so, justifying the Impugned Order.

Details of the Judgment:

Issue 1: Communication issues during the Covid-19 pandemic
The petitioner asserts that due to confusion caused by the pandemic, notices sent to the registered e-mail were not accessed by the Chartered Accountant, leading to the petitioner's unawareness of the Impugned Order. The petitioner requests another opportunity to explain the case, emphasizing that the partners had contributed capital to the firm.

Issue 2: Adequacy of notices and petitioner's response
The respondent argues that multiple notices were issued under Section 142(1) of the Income Tax Act, with a final opportunity given to furnish documents. Despite these notices, the petitioner failed to respond, resulting in the Impugned Order. The respondent contends that the writ petition should be dismissed due to the petitioner's delay in filing an appeal.

Judgment:
After considering the arguments, the Court finds the petitioner's explanation reasonable, noting that all notices were sent to the registered e-mail, operated by the Chartered Accountant. Given the circumstances of the pandemic waves, the Court quashes the Impugned Order and Demand Notice, remanding the case for a fresh order within eight weeks. The petitioner is directed to cooperate with the respondent and treat the quashed order as a Show Cause Notice. The writ petition is allowed with no costs, and connected petitions are closed.