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2025 (4) TMI 921 - HC - Income TaxValidity of show cause notice issued u/s 144 (8) by the first respondent - petitioner submitted that prior to the issuance of the impugned show cause notice by the first respondent/JAO the second respondent/faceless Assessing Officer has already issued a show cause notice and when the faceless proceedings were going on the second respondent abruptly and arbitrarily transferred the case to the first respondent/jurisdictional officer without any intimation or communication to the petitioner stating the reason for transfer therefore the petitioner was in a perplexed state as to which show cause notice he is required to file reply HELD THAT - It is no doubt true that initially a show cause notice dated 28.02.2025 was issued by the second respondent however since the said show cause notice was issued by a faceless AO the case was transferred to the file of the jurisdictional AO viz. the first respondent who issued the impugned show cause notice dated 12.03.2025 and called for reply/objections from the petitioner. In the said show cause notice itself a reference was made to the show cause notice issued by the Faceless Assessment Officer dated 28.02.2025 stating that the case of the petitioner has been transferred to the jurisdictional/AO first respondent therefore the contention of the petitioner that the petitioner got perplexed as to which show cause notice they have to file reply/objection is baseless as rightly pointed out by the learned Standing Counsel for the respondent. Though this Court is not inclined to entertain the Writ Petition however grants liberty to the petitioner to file reply to the show cause notice issued by the first respondent Jurisdictional Assessing Office which is impugned herein within a period of two weeks from the date of receipt of a copy of this order. Thereafter the first respondent is directed to consider the reply and shall issue a clear 14 days notice affording an opportunity of personal hearing to the petitioner and shall decide the matter in accordance with law.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court in this matter are:
2. ISSUE-WISE DETAILED ANALYSIS Validity and Jurisdiction of the Second Show Cause Notice The legal framework governing the issuance of show cause notices under the Income Tax Act, 1961, particularly Section 144(8), empowers the Assessing Officer to call for explanations from the taxpayer before passing any order. The faceless assessment scheme permits issuance of notices by faceless officers, but the jurisdictional Assessing Officer retains supervisory authority and may take over the proceedings. The Court noted that the initial show cause notice dated 28.02.2025 was issued by the faceless Assessing Officer, and on the same date, the case was transferred to the jurisdictional Assessing Officer, who subsequently issued the impugned show cause notice dated 12.03.2025. The latter notice explicitly referenced the earlier notice and informed the petitioner of the transfer. This demonstrated that the jurisdictional Assessing Officer acted within the scope of authority vested under the Income Tax Act and the faceless assessment scheme. The Court rejected the petitioner's contention that the second notice was issued without jurisdiction or authority of law, holding that the transfer and issuance of the second notice were legally valid and procedurally proper. Arbitrariness and Natural Justice in Transfer of Proceedings The petitioner argued that the transfer was abrupt, arbitrary, and effected without any intimation or communication, thereby violating principles of natural justice and causing confusion. The Court examined whether such transfer required prior notice or explanation to the petitioner. The Court observed that the impugned show cause notice dated 12.03.2025 itself contained a reference to the earlier faceless notice and the transfer of proceedings to the jurisdictional Assessing Officer. This inclusion served as sufficient communication regarding the transfer. The Court held that the transfer was not arbitrary but a procedural step permissible under the law, and the petitioner was adequately informed through the second notice. Hence, the Court found no merit in the argument that the transfer violated natural justice or was arbitrary. Perplexity Regarding Which Notice to Respond To and Time Allowed for Reply The petitioner contended that due to the issuance of two show cause notices by two different officers within a short span, there was confusion as to which notice required a reply. Further, the petitioner claimed that the jurisdictional Assessing Officer granted only two working days to file a reply, which was insufficient and unfair, especially since the petitioner had requested one month's time. The Court analyzed the contents of the impugned notice and found that it clearly referred to the earlier notice and the transfer, thereby negating any confusion about the notice to be replied to. Regarding the time granted, the Court acknowledged the petitioner's request for an extended period but noted that the Assessing Officer fixed a personal hearing on 24.03.2025, citing the limitation period expiring on 31.03.2025 as justification. While the Court did not find the petitioner's perplexity argument convincing, it nevertheless granted the petitioner liberty to file a reply within two weeks from the date of receipt of the order copy, thereby affording an opportunity to present objections adequately. The Court also directed the Assessing Officer to issue a clear 14-day notice for personal hearing thereafter, ensuring procedural fairness. Compliance with Mandatory Procedures and Authority of Law The petitioner asserted that the impugned notice was issued without following mandatory procedures and without authority of law. The Court examined the procedural history and the contents of the notices. It was evident that the faceless assessment scheme and the Income Tax Act permit transfer of cases from faceless officers to jurisdictional Assessing Officers. The impugned notice complied with the requirement of referencing the earlier notice and informing the petitioner of the transfer. The Court found no procedural irregularity or lack of authority in issuing the second show cause notice. Therefore, the Court concluded that the issuance of the impugned notice did not violate any mandatory procedural requirement or legal authority. 3. SIGNIFICANT HOLDINGS The Court held that:
The core principles established include:
On the issues presented, the Court declined to quash the impugned show cause notice but ensured protection of the petitioner's rights by granting additional time to file a reply and directing a proper hearing before final adjudication.
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