Adherence to principles of natural justice is imperative in tax assessment proceedings.

JUDGMENT :

PRANAV TRIVEDI, J.

1. Heard learned advocate Mr. Anshul Jain for learned advocate Mr. Love Sharma for the petitioner and learned Senior Standing Counsel Mr. Varun Patel for the respondent.

2. Rule returnable forthwith. Learned Senior Standing Counsel Mr. Varun Patel waives service of notice of rule for and on behalf of the respondent.

3. Having regard to the controversy arising in this petition which is in a narrow compass, with the consent of the learned advocates for the parties, the same is taken up for hearing.

4. By this petition under Article 226 of the Constitution of India, the petitioner has challenged and prayed for quashing and setting aside the impugned demand notice dated 31.3.2023 issued by the respondent No.2 (hereinafter referred to as ‘the respondent’ for short) under Section 156 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’ for short) as well as impugned order dated 31.3.2023 issued under Section 147 read with Section 144 of the Act as well as show-cause notice dated 16.3.2023 issued under Section 148A(b) of the Act and initiation of reassessment proceedings as well as Order dated 26.3.2022 under section 148A(d) of the Act and Notice dated 26.3.2022 under Section 148 of the Act.

5. Brief facts of the case are that the petitioner is an individual having PAN No. ATVPP8080F and is a non-resident Indian having permanent residence at Dubai, UAE. The petitioner is having income in India in form of NRE Bank Deposits in HDFC Bank having Account No. 03211060004162 and Standard Chartered Bank having Account No. 2261002979, which is invested through foreign exchange remittance. It is the case of the petitioner that he is having no other income in India except interest from NRE Bank Deposits and therefore has exempted income under Section 10(15) of the Act. It is the case of the petitioner that the respondent alleged that the petitioner has not filed return of income for A.Y. 2018-19. The same was flagged as per Risk Management Strategy. It was alleged by the respondent that the petitioner did not disclose certain transactions for the A.Y. 2018-19. Therefore, when the petitioner had not filed return of income, it was alleged that the disputed transactions were allegedly not disclosed by the petitioner. In view of the same, a show- cause notice dated 16.3.2022 was issued to the petitioner as per the provisions of Section 148 A(b) of the Act, requesting to show cause to as why notice under Section 148 of the Act should not be issued against the petitioner. Subsequent to the notice issued by the respondent, an order under Section 148 A(d) of the Act was passed on 26.3.2022 declaring the petitioner’s case a fit case for assessment and further declaring that an amount to the tune of Rs.3,05,18,951/- has allegedly escaped income for A.Y. 2018-19.

5.1 It is the case of the petitioner that after the case being dormant for several months, suddenly in the year 2023, in pursuance of notice dated 26.3.2022 issued under Section 148 A(d) of the Act read with Section 148 of the Act, a notice dated 1.2.2023 was issued under Section 142(1) of the said Act which, inter alia, demonstrate the details of the return of income filed for the A.Y. 2018-19. The petitioner was also requested to submit the documents along with a brief note describing the disputed activities undertaken by the petitioner. The petitioner submitted details on 10.2.2023. Subsequently, another notice under Section 142(1) of the Act was issued on 10.3.2023 requiring further details of the return of income filed for the A.Y. 2018-19. The petitioner responded to the respondent on 15.3.2023. Thereafter, the department issued show cause notice dated 22.3.2023, making observation that the responses of the petitioner has not explained the source of income and further requiring