2022 (4) TMI 1632 - HC - Income Tax

Validity of reassessment order - violation of principles of natural justice due to communication sent to the old e-mail ID - HELD THAT - Whether it has been sent to the old e-mail ID or otherwise only three days time was given between 24th March to 27th March 2022 to give reply for the show cause notice along with the proposal i.e. the Draft Assessment order. It has been pointed out that there is a vast difference in addition between the Draft Assessment order and the final assessment order which is impugned herein where more than 12 Crores have been added though the same has been given up in the Draft assessment order. Hence petitioner urges that the petitioner/assessee if had been given a chance of repudiating the same as proposed through the Draft assessment order along with the show cause notice dated 24.03.2022 it would have been in a position to tell as to how this addition could not have been possible. Therefore in order to give one such chance to the petitioner this Court feels that the impugned order can be set aside and the matter can be remitted back to the respondent for reconsideration. The impugned order is set aside and the matter is remitted back to the respondent for reconsideration. While reconsidering the same the impugned show cause notice along with the Draft Assessment order shall be treated as a fresh notice with fresh Draft assessment order and accordingly it is open to the petitioner/assessee to respond to the same by giving reply with documents.

Summary

Issues:
1. Validity of the impugned order dated 30.03.2022 under Section 147 of the Income Tax Act, 1961 for the Assessment year 2015-16.
2. Allegation of violation of principles of natural justice due to communication sent to the old e-mail ID.
3. Delay in response by the petitioner to the notice issued under Section 148 of the Income Tax Act, 1961.

Detailed Analysis:

1. The petitioner sought a Writ of Certiorarified Mandamus to challenge the impugned order dated 30.03.2022 passed under Section 147 of the Income Tax Act, 1961 for the Assessment year 2015-16. The petitioner had not filed a return under the Act, leading to a notice under Section 148 for assessment under Section 147. The petitioner filed a return after significant delay, and despite a final show cause notice, failed to respond promptly. The impugned assessment order was challenged on grounds of inadequate opportunity to respond. The Court considered the substantial difference between the Draft Assessment order and the final assessment order, noting that more than 12 Crores were added in the final assessment order, which was not present in the Draft order. The Court held that the petitioner should have been given a chance to address this discrepancy, leading to setting aside the impugned order for reconsideration by the Revenue.

2. The petitioner argued that communication, including the show cause notice, was sent to an old e-mail ID despite informing the Revenue of a change. The Revenue contended that the old e-mail ID belonged to the petitioner's Accountant, and thus, the communication was valid. The Court acknowledged the discrepancy but focused on the limited three-day window provided for response between 24th March to 27th March 2022. The Court found that the delay in response was significant but emphasized the importance of granting the petitioner an opportunity to contest the additions made in the final assessment order. Consequently, the Court set aside the impugned order and directed a reconsideration by the Revenue, emphasizing the need for natural justice principles to be upheld.

3. The Court addressed the delay in the petitioner's response to the notice issued under Section 148 of the Income Tax Act, 1961. Despite the extended period taken by the petitioner to respond and the subsequent failure to reply promptly to the final show cause notice, the Court focused on the fundamental right of the petitioner to be heard adequately before final assessment. The Court highlighted the necessity for the petitioner to have the opportunity to contest the additions made in the final assessment order, stressing the importance of procedural fairness in tax assessments. As a result, the Court set aside the impugned order and remitted the matter back to the Revenue for reconsideration, allowing the petitioner a fresh chance to respond and contest the assessment.

In conclusion, the High Court of Madras set aside the impugned order dated 30.03.2022 under Section 147 of the Income Tax Act, 1961 for the Assessment year 2015-16, emphasizing the importance of providing the petitioner with a fair opportunity to respond and contest the assessment. The Court focused on upholding the principles of natural justice and procedural fairness, directing the Revenue to reconsider the matter, treating the show cause notice and Draft Assessment order as fresh notices, and granting the petitioner a two-week period to respond before a final assessment order is passed.