2023 (3) TMI 783 - HC - Income Tax

Reopening of assessment u/s 147 - as pointed out that the bank certificates relied upon by the Petitioner in the present proceedings had not bee annexed in the replies to the show cause notices issued under Section 148A(b) - HELD THAT - This Court sets aside the orders passed u/s 148A(d) of the Act for the Assessment Years 2018-19 2015-16 the notices issued under Section 148 and directs the Petitioner to file supplementary replies before the Assessing Officer clearly stating that the transactions referred to in the notices issued under Section 148A(b) of the Act have been duly accounted for in the account of the sole proprietorship firm and have been offered to tax. Petitioner shall enclose all the relevant documents including certificates issued by the Canara Bank income tax returns bank statements as well as the assessment orders passed in the name of a sole proprietorship for the said assessment years within two weeks.

Summary

Issues:
Challenging jurisdiction of notices under Income Tax Act, 1961 for multiple assessment years due to a dissolved partnership firm being incorrectly named.

Analysis:

1. The writ petition challenged notices issued under the Income Tax Act for different assessment years, claiming they were without jurisdiction as they were issued in the name of a dissolved partnership firm, Railton Electronics. The petitioner informed the department that the partnership firm was dissolved, and the business was taken over by the petitioner as a sole proprietor.

2. The petitioner's counsel argued that the impugned notices were invalid as the transactions mentioned were accounted for in the sole proprietorship firm's returns. He highlighted that there had been a scrutiny assessment in the name of the sole proprietor, Mr. Sanjay Gupta, and provided evidence from the petitioner's banker to support the claim.

3. The court noted that the bank certificates relied upon by the petitioner were not annexed in the replies to the show cause notices. Consequently, the court set aside the orders passed under the Income Tax Act for the relevant assessment years and directed the petitioner to file supplementary replies before the Assessing Officer. The petitioner was instructed to clearly demonstrate that the transactions referred to in the notices had been accounted for in the sole proprietorship firm and offered for tax.

4. The petitioner was further directed to submit all relevant documents, including bank certificates, income tax returns, bank statements, and assessment orders in the name of the sole proprietorship, within two weeks. The Assessing Officer was mandated to issue fresh orders within four weeks based on the provided information.

5. The court disposed of the writ petition and pending application with the specified directions, leaving the rights and contentions of all parties open for further proceedings.