Court sets aside Assessment Order & recovery notice for 2018-2019, grants petitioner fresh opportunity to address income addition

The court set aside the Assessment Order and recovery notice for Assessment Year 2018-2019, acknowledging the petitioner's genuine difficulties and directing a fresh opportunity to explain and file objections regarding the proposed addition of income. The court emphasized the petitioner's bona fide lapses, attributing non-compliance to reasons such as miscommunication, technical glitches, and pandemic-related challenges. The first respondent was instructed to resume proceedings from the stage of replying to the show cause notice, granting the petitioner another chance to address the assessment issues.

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Issues:
Challenge to recovery notice and assessment order for Assessment Year 2018-2019.

Analysis:
The petitioner sought to quash the recovery notice and assessment order for the Assessment Year 2018-2019. The petitioner explained that after the death of a partner, the business was left with the deceased partner's wife and daughter, causing the business to come to a standstill. For the Assessment Year 2018-2019, the petitioner declared a loss as no business activities were conducted. The petitioner responded to scrutiny notices and a show cause notice under Section 142(1) of the Income Tax Act, citing miscommunication and technical glitches as reasons for non-compliance.

The petitioner highlighted confusion regarding email communication due to an employee leaving, resulting in delays in responding to official notices. The petitioner attributed non-compliance with the show cause notice to genuine difficulties arising from the Covid-19 pandemic and other bona fide reasons. Despite the Assessing Officer treating a deposit as unexplained income and directing its addition to the petitioner's income, the court acknowledged the petitioner's genuine difficulties and decided to provide another opportunity to explain and file objections regarding the proposed addition.

The court set aside the Assessment Order and recovery notice, emphasizing the bona fide lapses on the petitioner's part and directing the first respondent to resume proceedings from the stage of replying to the show cause notice. The judgment concluded by disposing of the petition with the aforementioned observations, ensuring justice by granting the petitioner another chance to address the issues raised during the assessment process.

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