Court quashes unfair show cause notice for Assessment Year 2018-19 due to procedural errors.

The court quashed the show cause notice, order, and notice issued for the Assessment Year 2018-19, as the petitioner was not given a fair opportunity to present their defense due to discrepancies in the assessment years mentioned in the notice. The court found a violation of the principles of natural justice in this case. The respondents were allowed to take further lawful steps, and the petitioner had the liberty to seek remedies if aggrieved by future actions. The writ petition and pending applications were disposed of accordingly.

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Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2018-19; Violation of principles of natural justice.

Analysis:
The petitioner challenged a notice dated 27th March, 2022 under Section 148 of the Income Tax Act, 1961 for the Assessment Year 2018-19. The petitioner argued that they were not given the minimum statutory prescribed time of seven days to reply to the notice. The notice alleged bogus Long Term Capital Gains (LTCG) on shares of a specific company, which the petitioner claimed pertained to a different assessment year. The petitioner had already responded with relevant documentary evidence, disputing the claims made in the notice. The order under Section 148A(d) did not align with the facts mentioned in the show-cause notice, creating discrepancies. The petitioner contended that the impugned order inaccurately stated that no response was furnished to the show-cause notice.

During the proceedings, it was revealed that the petitioner was issued show cause notices for different assessment years, each pertaining to distinct allegations. The respondent admitted errors in serving the correct annexure with the notice, leading to confusion between assessment years. The respondent withdrew the allegation of suppression of facts previously made. The court found that the petitioner was not provided with a fair opportunity to present their defense, as the reasons for reassessment pertained to a different assessment year than stated in the notice. Consequently, the court concluded that the principles of natural justice were violated in this case.

As a result of the above findings, the court quashed the show cause notice, order, and notice issued for the Assessment Year 2018-19. The respondents were permitted to take further steps in accordance with the law if permitted. The petitioner was granted liberty to seek remedies if aggrieved by any future steps taken by the respondents. The writ petition and pending applications were disposed of in light of the court's decision.

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