2024 (12) TMI 1485 - HC - Income Tax

Compulsory selection of returns for scrutiny against government company - contention of petitioner is that no scrutiny could have been carried out, as per the guidelines issued by the Central Board of Direct Taxes and petitioner is a completely owned government company depending only on the government funds to carry out the development activities with its seat at Patna; totally funded by the Government - HELD THAT - The guidelines, as placed is one for compulsory selection for returns of complete scrutiny during the financial year 2021-22 and the conduct of the assessment proceedings in such cases. Petitioner asserted that the petitioner does not come under any of the categories prescribed. However, we are of the opinion that the guidelines are only for compulsory selection of returns for scrutiny and it does not preclude random selection for scrutiny by the Assessing Officers. The categories coming under the guidelines are those which are to be taken up mandatorily for scrutiny and this does not create any restriction of any other category being taken up for scrutiny. Violation of principles of natural justice, insofar as no hearing having been granted to the assessee - Admittedly, the petitioner while uploading the application did not seek for an opportunity for personal hearing. The petitioner s contention is that the reply filed specifically sought for such personal hearing. As per the system generated notices and uploading of on-line replies in specified forms; there is a specific column provided for requesting personal hearing. Unless the personal hearing is sought for, there would be no requirement to issue such personal hearing. Admittedly, in the present case, the column for personal hearing was not ticked as Yes . The reply was filed and it was duly considered in the order passed. We find absolutely no reason to interfere with the order also on the ground of violation of principles of natural justice. On the above reasoning, we find absolutely no reason to invoke the extra ordinary remedy under Article 226.

Summary

In the case before the Patna High Court, the petitioner, a government company, challenged a series of assessment orders (Annexure-P/7) under the Income Tax Act, 1961, despite the availability of a statutory appellate remedy. The petitioner argued that the scrutiny was not permissible under the Central Board of Direct Taxes guidelines (Annexure-P/9, dated 10.06.2021), claiming the company did not fall within the specified categories for mandatory scrutiny. However, the court clarified that these guidelines pertain to compulsory selection and do not restrict the random selection of cases for scrutiny by Assessing Officers.

The petitioner also alleged a violation of the principles of natural justice due to the lack of a personal hearing. The court noted that the petitioner did not request a personal hearing through the system-generated notices, as the relevant option was not selected. The court found no procedural violation, as the reply was considered in the order.

The court concluded there was no basis to invoke the extraordinary remedy under Article 226 and dismissed the writ petition, allowing the petitioner to pursue an appeal, subject to exceptions such as limitation.