Court overturns order & notice under Income Tax Act, stresses natural justice principles.

The court set aside the impugned order and notice under Section 148A(d) of the Income Tax Act for AY 2017-18, citing violation of natural justice principles. The matter was remanded back to the Assessing Officer for a fresh decision after considering the petitioner's reply. The court emphasized the importance of providing a reasonable period for the assessee to respond to show cause notices, as per Section 148A(b) of the Act. The writ petition was disposed of with directions for further consideration of all parties' rights and contentions.

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Issues:
Challenging order under Section 148A(d) of the Income Tax Act, 1961 and Notice under Section 148 for AY 2017-18.

Analysis:
The petitioner challenged the order passed under Section 148A(d) of the Income Tax Act, 1961, and the Notice issued under Section 148 of the Act for the Assessment Year 2017-18. The petitioner contended that there was a delay in providing the material forming the basis of the allegation of escapement of income, which affected their ability to respond adequately. The petitioner cited the judgment of Union of India Vs. Ashish Agarwal, emphasizing the importance of providing adequate time to the assessee to respond to the show cause notice. The petitioner argued that there was a violation of the principles of natural justice as their request for an extension to file a response was not considered before passing the impugned order dated 29th July, 2022.

The court observed that under Section 148A(b) of the Act, the assessee is entitled to a reasonable period to respond to the show cause notice. It noted that the Assessing Officer can provide up to thirty days for a response, which can be further extended upon application by the assessee. Referring to the case of Meenu Chaufla Vs. ITO, the court highlighted that the AO must consider the reply of the assessee before making an order under Section 148A(d) of the Act. In this case, the court found that the mandate of Section 148A(c) was violated as the reply filed by the petitioner on 26th July, 2022 was not taken into account before passing the impugned order.

Consequently, the court set aside the impugned order and notice dated 29th July, 2022 for the AY 2017-18 and remanded the matter back to the AO for a fresh decision after considering the reply filed by the petitioner within four weeks. The court disposed of the writ petition with these directions, leaving the rights and contentions of all parties open for further consideration.

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