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IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Shakdher, Girish Kathpalia, JJ.
Sukhmeet Kaur – Appellant
Versus
Income Tax Officer Ward 28 1 & Anr. – Respondents
W.P.(C) 9168 of 2023
Decided On : 12-07-2023
Income Tax Act - Assessment Order - The court directed the Assessing Officer to issue a show cause notice to the petitioner, granting sufficient time to file a response and furnish relevant documents, before passing an assessment order. The court emphasized that it had not examined the merits of the case and nothing stated in the order would impact the assessment order to be passed by the Assessing Officer.
Fact of the Case:
The petitioner failed to respond to a notice served under Section 148A(b) of the Income Tax Act, leading to the Assessing Officer passing an assessment order concerning a high value transaction related to an immovable property. The petitioner claimed that the transaction had been taken into account twice over and that she was a 50% owner of the property, which was not brought to the notice of the Assessing Officer at the relevant stage.
Finding of the Court:
The court disposed of the writ petition with a direction for the Assessing Officer to issue a show cause notice to the petitioner, granting sufficient time to respond and furnish relevant documents before passing an assessment order. The court emphasized that it had not examined the merits of the case and nothing stated in the order would impact the assessment order to be passed by the Assessing Officer.
Issues: Failure to respond to notice under Section 148A(b) of the Income Tax Act, assessment order concerning a high value transaction related to an immovable property, petitioner's claim of error by the Assessing Officer, and failure to bring relevant facts to the notice of the Assessing Officer at the relevant stage.
Ratio Decidendi: The court directed the Assessing Officer to issue a show cause notice to the petitioner, granting sufficient time to file a response and furnish relevant documents, before passing an assessment order. The court emphasized that it had not examined the merits of the case and nothing stated in the order would impact the assessment order to be passed by the Assessing Officer.
Final Decision: The writ petition was disposed of with a direction for the Assessing Officer to issue a show cause notice to the petitioner, granting sufficient time to respond and furnish relevant documents before passing an assessment order. The court emphasized that it had not examined the merits of the case and nothing stated in the order would impact the assessment order to be passed by the Assessing Officer.
JUDGMENT
[Physical Hearing/Hybrid Hearing (as per request)]
Rajiv Shakdher, J. (Oral)
CM Appl.34884/2023
1. Allowed, subject to just exceptions.
W.P.(C) 9168/2023 & CM Appl.34883/2023 [Application filed on behalf of the petitioner seeking interim relief]
2. It is not disputed by the counsel for the petitioner that although a notice dated 23.02.2023 was served on the petitioner under Section 148A(b) of the Income Tax Act, 1961 [in short, "Act"], she failed to respond to the same.
3. It appears that, as a result, the Assessing Officer (AO) proceeded to pass an assessment order dated 21.03.2023, under Section 148A(d) of the Act.
4. The case set up against the petitioner is that she had entered into a high value transaction concerning an immovable property, qua which there was no visibility, since the petitioner had not filed her income tax return for the Assessment Year (AY) in issue, i.e., AY 2016-17.
5. The petitioner claims that the AO has committed an error, inasmuch as the transaction qua the same property has been taken into account twice over.
5.1. Furthermore, it is stated by the counsel for the petitioner that the petitioner was a 50% owner of the subject immovable property.
6. Unfortunately, these facts were not brought to the notice of the AO by the petitioner at the relevant stage. The relevant stage for bringing these facts to the notice of the AO was when the notice under Section 148A(b) was served on the petitioner.
7. Given these circumstances, Mr Shlok Chandra, learned senior standing counsel, who appears on behalf of the respondents/revenue, says that if an assessment order is not passed, the AO will issue a show cause notice, and the petitioner will have liberty, at that stage, to put forth her stand vis.-a'-vis. the transaction in issue, along with the relevant documents.
7.1. Furthermore, Mr Chandra says that he refutes the stand taken by the petitioner, that the transaction qua the same property, has been taken into account by the respondent/revenue twice over.
8. We may note that counsel for the petitioner, on instructions, states that up until now, no assessment order has been passed.
9. The writ petition is thus, disposed of, with a direction that the AO will issue a show cause notice to the petitioner. The show cause notice will grant sufficient time to the petitioner to file a response.
10. The petitioner will have liberty not only to file a reply, but also to furnish relevant documents in support of her stand.
11. The AO will pass an assessment order, in which he will deal with the reply filed by the petitioner vis.-a'-vis. the aforementioned show cause notice.
12. Needless to add, since we have not examined the merits of the case, nothing stated hereinabove will impact the assessment order that the AO will passed hereafter.
13. Consequently, pending interlocutory application shall stand closed.
14. Parties will act based on the digitally signed copy of the order.
The court emphasized the importance of the Assessing Officer issuing a show cause notice to the petitioner, granting sufficient time to respond and furnish relevant documents before passing an assess....
The central legal point established in the judgment is the duty of the Assessing Officer to consider all relevant evidence before making an assessment under the Income Tax Act.
Violation of principles of natural justice in not granting the petitioner enough opportunity to furnish an explanation in defense of the charge levelled against him.
A notice under Section 148 of the Income Tax Act issued beyond four years without proper examination of material facts is invalid and lacks jurisdiction.
The importance of timely assertion and the requirement for verification and personal hearing before passing an assessment order under the Income Tax Act.
Failure to adhere to the directions in the Standard Operating Procedure (SOP) for Assessment Unit, which led to the quashing of the impugned notices and order.
Compliance with natural justice principles under Section 144B is mandatory, necessitating personal hearing opportunities when variances in assessment orders are proposed.
The failure to grant a personal hearing as mandated under the Income Tax Act invalidates the assessment order, ensuring due process for taxpayers.
Compliance with procedural requirements and the right to a fair hearing are essential in proceedings under the Income Tax Act, 1961.
The Assessing Officer must provide adequate reasoning for reassessment actions and ensure compliance with natural justice principles.
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