2023 (7) TMI 21 - HC - Income Tax

Income Tax Order Overturned: NRI Petitioner to Respond to New Notice Due to Flawed Calculations and Lack of Fair Hearing.

Packirisamy Senthilkumar Versus Government of India

The HC set aside the impugned order under Section 147 of the Income Tax Act, 1961, due to flawed calculations and lack of opportunity for the petitioner, ... Validity of reopening of assessment u/s 147 - Purchase the immovable property on which TDS has been deducted - TDS statement (Form 26QB) shows the amount of purchase of property twice - HELD THAT:- The notice to the petitioner has been based only for the aforesaid reasons, whereas the impugned order would further add new reasons for the order. The petitioner had not been given an opportunity to answer and explain the same. Therefore, taking into account the fact that the very basis of the demand is erroneous and the impugned order proceeds to give new reasons, which the petitioner has not been given an opportunity to defend, the impugned order is set aside. The notice issued u/s 148A(b) shall be treated as an additional show cause notice and the petitioner shall submit his explanation to this additional show cause notice within a period of two weeks from the date of receipt of a copy of this order. Decided in favour of assessee. Issues Involved: The petitioner seeks a Writ of Certiorarified Mandamus to quash an order under Section 147 of the Income Tax Act, 1961, relating to the assessment year 2016-2017 for PAN No. GMIPS5765N, and prevent reassessment.Details of the Judgment:Issue 1: Jurisdiction and AssessmentThe petitioner, a Non-Resident Indian residing in Singapore, asserts that all income is sourced from Singapore. Despite purchasing properties and TDS deductions, he did not file an income tax return for the relevant assessment year. The respondent issued notices based on alleged escaped income.Issue 2: Lack of Opportunity and Flawed BasisThe petitioner argues that the respondent's orders were issued without allowing a proper response. The respondent's calculations of escaped income were flawed, as they incorrectly combined the property purchase amount and TDS payment. The petitioner was not given a chance to address new reasons introduced in the impugned order.JudgmentThe High Court found the basis for the clarification letter flawed and set aside the impugned order. The petitioner is directed to respond to an additional show cause notice within two weeks, with the respondent required to pass orders after a personal hearing within eight weeks. No costs were awarded in this matter.