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IN THE HIGH COURT AT CALCUTTA
RAJA BASU CHOWDHURY, J.
Suhag Overseas Trading Pvt. Ltd. - Petitioner
Versus
Union of India & Ors. - Respondents
WPO No. 363 of 2024
Decided On : 10-07-2024
Taxation - Income Tax Act - Sections 148A(b), 148A(d), 143(2), 147, 142(1) - The court emphasized the necessity of adhering to principles of natural justice in tax reassessment proceedings, particularly the obligation to consider responses before passing orders.
Fact of the Case:
The petitioner challenged the reassessment proceedings and notices issued under the Income Tax Act, claiming they were arbitrary and without jurisdiction, particularly focusing on the failure to consider responses to notices before passing the assessment order.
Finding of the Court:
The court found that the Assessing Officer had provided multiple opportunities for the petitioner to respond but noted that the petitioner failed to respond within the specified timeframes, thus upholding the assessment order.
Issues: Whether the assessment order was passed in violation of principles of natural justice due to the failure to consider the petitioner's responses and adjournment requests.
Ratio Decidendi: The court held that the Assessing Officer was not required to consider the adjournment request as it was made after the deadline for response, and the petitioner had been given ample opportunity to present its case.
Result: The writ petition was dismissed, allowing the petitioner to pursue an appeal.
JUDGMENT :
Raja Basu Chowdhury, J.
1. The present writ petition has been filed, inter alia, for declaration that the reassessment proceeding including the notices dated 25th March, 2022, 31st March, 2022, the order dated 29th April, 2022, the notice dated 29th April, 2022 and the order dated 22nd March, 2024 are arbitrary, without jurisdiction and should be recalled and set aside.
2. The petitioner’s case proceeds on the premise that on or about 25th March, 2022, the petitioner was served with a notice under Section 148A(b) of the Income Tax Act, 1961 (hereinafter referred to as ‘the said Act’) in respect of the assessment year 2018-2019. The same was duly responded to by the petitioner by a communication in writing dated 26th March, 2022. Incidentally, without considering the said reply, another notice under Section 148A(b) of the said Act was issued on 31st March, 2022 in respect of the assessment year 2018-2019. The petitioner had once again responded to the said notice by reiterating its stand taken in the response dated 26th March, 2022.
3. Record would reveal that the said show cause was disposed of by passing an order dated 29th April, 2022 issued under Section 148A(d) for the assessment year 2018-2019, inter alia, by observing that it was a fit case for issuance of notice under 148 of the said Act in respect of the assessment year 2018-2019. Following the same and consequent upon issuance of a notice under Section 148 of the said Act, the petitioner was served with notice under Section 143(2) read with Section 147 of the said Act. The petitioner duly responded to the said notice. The same was followed by a further notice under Section 142(1) dated 12th April, 2023.
4. The petitioner had also duly responded to the same by communication dated 4th May, 2023. Particulars of the explanation provided by the petitioner would corroborate from the said response. The same was followed up by a further detailed response dated 4th September, 2023 appearing at page 97/98 of the writ petition. Subsequently a show cause notice was issued on 9th March, 2024 in respect of the assessment year 2018-19, indicating the proposed variations. The petitioner was called upon to respond to the same on or before 14th March, 2024.
5. The petitioner did not respond to the same within the time specified. However, before the final assessment order was passed, on 15th March, 2024, the petitioner sought for an adjournment and requested the Assessing Officer/Faceless Assessment Unit to permit the petitioner additional time till 22nd March, 2024. According to the petitioner, the petitioner had duly filed its response on 22nd March, 2024. However, the Assessing Officer/ Faceless Assessment Unit without considering such response had passed the assessment order thereby, adding back Rs. 15 crores as unexplained cash credit under Section 68 of the said Act.
6. Assailing, inter alia, the said order, the present petition has been filed.
7. Mr. Majumdar, learned senior advocate representing the petitioner by drawing attention of this Court to the notice dated 25th March, 2022 issued under Section 148A(b) of the said Act submits that the Assessing Officer did not dispose of the said show cause notice despite the fact that the petitioner had responded to the same. He submits that without disposing of such notice, a rectified notice dated 31st March, 2022 was issued. He submits that the petitioner had duly responded to the same and had reiterated its stand taken in its response dated 26th March, 2022. Unfortunately, the Assessing Officer without taking note of the petitioner’s response by passing a cryptic order had decided the issue by declaring that the same was a fit case for issuing of a notice under Section 148 of the said Act.
8. By drawing attention of this Court to the notice issued under Section 143(2) read with Section 147 of the said Act dated 11th April, 2023 it is submitted that the order under Section 148A(d) of the said order dated 29th April, 2022 forms the b
The court established that failure to respond within specified timelines does not constitute a violation of natural justice in tax reassessment proceedings.
The main legal point established in the judgment is the importance of providing the assessee with a reasonable opportunity of being heard and the right to file a defense in reassessment proceedings u....
The central legal point established in the judgment is the interpretation of the amended re-assessment scheme introduced by the Finance Act, 2021, and the importance of upholding principles of natura....
Active participation in reassessment proceedings without objecting to the impugned notice may lead to dismissal of a challenge to the final assessment order.
The assessment order was quashed due to violations of natural justice and failure to follow mandatory procedures under Section 144B of the Income Tax Act.
The court held that the Assessing Officer's failure to consider the petitioner's detailed replies before passing the reassessment order violated procedural justice under the Income Tax Act.
The assessment order was invalid due to non-compliance with procedural requirements under Section 144B of the Income Tax Act, breaching principles of natural justice.
The court established that the discretionary nature of inquiries under Section 148A does not mandate a personal hearing or exhaustive justification for the Assessing Officer's decisions.
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