2022 (11) TMI 1025 - HC - Income Tax

Court sets aside order for 2016-17, grants advocate time to respond, emphasizes neutrality.

The Court set aside the impugned order and notice for the Assessment Year 2016-17, directing the petitioner, an advocate, to file a supplementary reply ... Reopening of assessment u/s 147 - Validity of impugned order passed u/s 148A(d) conducted proceedings on deactivated PAN - assessee had filed no response on the merits of the case and hence determined as income having escaped assessment in the form of stock / bills of entry for import - HELD THAT:- This Court is of the view that interest of justice would be served if the petitioner is given an opportunity to file a supplementary reply to the notice issued under Section 148A(b) of the Act. Consequently, the impugned order passed under Section 148A(d) of the Act and the notice issued under Section 148 of the Act, both dated 26th July, 2022 for the Assessment Year 2017-18 are set aside and the petitioner is directed to file a supplementary reply to the notice issued under Section 148A(b) of the Act within four weeks. The Assessing Officer shall pass a fresh order under Section 148A(d) within eight weeks thereafter in accordance with law. Issues:Challenge to impugned order under Section 148A(d) of the Income Tax Act, 1961 and notice issued under Section 148 for the Assessment Year 2016-17.Analysis:The petitioner, an advocate, challenged the impugned order passed under Section 148A(d) of the Income Tax Act, 1961, and the notice issued under Section 148 for the Assessment Year 2016-17. The petitioner contended that the respondent conducted proceedings on a deactivated PAN, while the petitioner had communicated that all income tax compliances were made on the correct and active PAN. The petitioner emphasized that the incorrect PAN had been formally deactivated by the Income Tax Department, and subsequent communications were made to confirm this deactivation.Upon accepting notice, the respondent's counsel stated that the assessee had not responded on the merits of the case, leading to a determination of Rs. 10,15,17,895/- as income that had escaped assessment. In rejoinder, the petitioner's counsel directed the Court's attention to responses given during the proceeding under Section 142(1) of the Act.After hearing both parties, the Court decided that justice required giving the petitioner an opportunity to file a supplementary reply to the notice issued under Section 148A(b) of the Act. Consequently, the impugned order and notice for the Assessment Year 2017-18 were set aside. The petitioner was directed to file a supplementary reply within four weeks, and the Assessing Officer was instructed to pass a fresh order within eight weeks thereafter. The Court clarified that it did not comment on the merits of the controversy, leaving the rights and contentions of all parties open. The Assessing Officer was directed to accept emails or hard copies of replies, materials, and evidences filed by the petitioner, considering the proceedings were based on a deactivated PAN.