2022 (6) TMI 91 - HC - Income Tax

Court upholds validity of Income Tax Act notice, dismisses challenge on jurisdiction & natural justice grounds.

The court dismissed the writ petition challenging a notice issued under Section 148 of the Income Tax Act, finding the notice validly issued within the ... Reopening of assessment u/s 147 - Period of limitation - Valid service of notice or not? - HELD THAT:- The petitioner has neither filed his ITR for AY 2016-17 under Section 139(1) of the Act nor filed his ITR under Section 148 of the Act. As per Section 139(1) of the Act, it is mandatory to file the ITR for an individual if his total income during the previous year exceeds maximum amount which is not chargeable to income tax. Therefore, as per Explanation 2(a) of Section 147 of the Act, there is a deemed escapement of Income by the Petitioner. In the present case, the petitioner did not file his ITR under Section 148, thus in view of the principles laid down by the Apex Court in the case of GKN Driveshafts (India) Ltd. v. Income Tax Officer & Ors.[2002 (11) TMI 7 - SUPREME COURT] the petitioner is not even entitled to raise objections to the notice issued under the Act. It is pertinent to mention that despite the petitioner not following the mandate enunciated in GKN Driveshafts (Supra), the revenue responded to the objections filed by the petitioner and disposed of the same vide order dated 09.02.2022 supplied to the petitioner vide letter dated 10.02.2022 The impugned notice in the present case is dated 27.03.2021. The notice has also been digitally signed on the same day. Thus, the contention of the petitioner that the notice under Section 148 is beyond limitation does not hold any force and is rejected. The address at which notice was sent by the Revenue is, one of the addresses mentioned by the petitioner on his portal as per Section 282 of the Act read with Rule 127 of the Income Tax Rules. Further, the notice under Section 148 was uploaded on the E-filing portal of the petitioner on 27.03.2021.The petitioner has himself chosen the communication address to be of Faridabad, Haryana which is clearly reflected in the document of PAN jurisdiction details of the petitioner. The petitioner has also raised a plea that notice under Section 148 was never served upon him. The plea of petitioner is that the notice has not been sent at his address, rather the petitioner went to the extent of saying that the notice might have been sent to some other person of his name and may not even belong to him. It is a matter of record that the address at which the notice was sent was mentioned in the PAN details of the petitioner. Section 139 A (5) (d) provides that it is the responsibility of the assessee to intimate the A.O. with respect to any change in his address or in the name and nature of his business on the basis of which the Permanent Account Number was allotted. Though, the petitioner has stated that he had sent a request for change of his address, however, no such communication has been placed on record by the petitioner. If the petitioner is claiming change of his address in his PAN details then, it was obligatory on his part to place the same on record. More so, these are disputed questions of facts, which can be agitated before the authority below. This Court in the writ jurisdiction cannot entertain such pleas. The petitioner has also argued vehemently, regarding the discrepancy in the order disposing of objection filed by him against the reopening of assessment. The issue has been raised as to the fact that the date of order has been mentioned to be 09.02.2022 whereas the communication is dated 10.02.2022. We, consider that there is no force in this contention. It is clear from the record that the order dated 09.02.2022 has been communicated on 10.02.2022. The other discrepancy regarding the date of notice mentioned in the said order as 27.01.2021 instead of 27.03.2021 seems to be a typographical error. The petitioner has also argued that he was not obliged to file any return for the relevant year, as there was no income. The plea of the petitioner is that he got an amount as an advance by virtue of the orders of the Court and the same cannot be assessed as an income in his hand for the assessment year 2016-17. We consider that this issue cannot be determined by this Court in the writ jurisdiction, the petitioner can raise this issue before the authorities below, who is the appropriate forum to decide the same. WP dismissed. Issues Involved:1. Validity of the notice issued under Section 148 of the Income Tax Act for reassessment.2. Jurisdiction of the National Faceless Assessment Centre (NFAC).3. Service and timing of the notice under Section 148.4. Opportunity for a physical hearing and principles of natural justice.5. Availability and adequacy of alternative remedies under the Income Tax Act.Comprehensive, Issue-wise Detailed Analysis:1. Validity of the Notice Issued Under Section 148:The petitioner challenged the notice dated 27.03.2021 issued under Section 148 of the Income Tax Act for the assessment year 2016-17. The petitioner argued that the notice was issued without jurisdiction, was not served within the prescribed time, and that the NFAC is not an Income Tax Authority as defined under Section 116 of the Act. The court found that the notice was validly issued within the limitation period and that the NFAC has the authority to issue such notices under the Faceless Assessment Scheme.2. Jurisdiction of the National Faceless Assessment Centre (NFAC):The petitioner argued that the NFAC is only an administrative formation and not an Income Tax Authority as defined under Section 116 of the Act. The court held that the NFAC functions under the authority of the Income Tax Act and that the Faceless Assessment Scheme merely changes the procedure of assessment to make it faceless, without altering the substantive law. The court found no illegality in the NFAC's actions and upheld its jurisdiction.3. Service and Timing of the Notice Under Section 148:The petitioner claimed that the notice was not served within the prescribed time and was sent to an incorrect address. The court noted that the notice was issued on 27.03.2021 and digitally signed on the same day, thus meeting the requirement of being issued within the limitation period. The court also found that the address used for service was one of the addresses provided by the petitioner in his PAN details, and that it was the petitioner's responsibility to update his address with the tax authorities.4. Opportunity for a Physical Hearing and Principles of Natural Justice:The petitioner argued that he was not given a physical hearing, which violated principles of natural justice. The court referred to the Faceless Assessment Scheme, which aims to eliminate human interface and allows for hearings through electronic means. The court found that the petitioner was given an opportunity for a virtual hearing, which he did not avail. Therefore, the court held that there was no violation of natural justice.5. Availability and Adequacy of Alternative Remedies:The court emphasized that the Income Tax Act provides a complete machinery for the assessment and reassessment of tax, and for obtaining relief through appeals. The court cited the principle that a writ petition should not be entertained when an adequate alternative remedy is available. The court found that the petitioner had not exhausted the available statutory remedies and dismissed the writ petition on this ground.Conclusion:The court dismissed the writ petition, holding that the notice under Section 148 was validly issued, the NFAC had the jurisdiction to issue the notice, the notice was served in accordance with the law, and the petitioner was given an opportunity for a virtual hearing. The court also emphasized the availability of alternative remedies under the Income Tax Act, which the petitioner had not exhausted.