Court overturns tax assessment due to lack of natural justice, orders fresh hearing within 8 weeks The court set aside the impugned assessment order and notice under Section 148 of the Income Tax Act, 1961, due to a violation of natural justice. The ...
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Court overturns tax assessment due to lack of natural justice, orders fresh hearing within 8 weeks
The court set aside the impugned assessment order and notice under Section 148 of the Income Tax Act, 1961, due to a violation of natural justice. The case was remitted back to the respondents for a fresh order after allowing the petitioner a hearing. The respondents were directed to pass a speaking order within eight weeks, enabling the petitioner to respond to the reasons given before finalizing the assessment. The writ petition was disposed of without costs.
Issues Involved: Challenge to impugned assessment order and notice under Section 148 of the Income Tax Act, 1961.
The petitioner challenged the impugned assessment order dated 29.03.2022 and the notice dated 31.03.2021 issued under Section 148 of the Income Tax Act, 1961 seeking to re-open the assessment completed on 30.12.2019 under Section 143(3) of the Act, 1961. A survey was conducted, leading to a show cause notice to the petitioner regarding cash deposits during the demonetization period. The petitioner replied, and a scrutiny assessment order was passed on 30.12.2019. Subsequently, a notice under Section 148 was issued on 31.03.2021, prompting the petitioner to file a return. Reasons for re-opening the assessment were provided, indicating discrepancies in cash deposits made in the name of another individual. The petitioner challenged the subsequent show cause notice and order, alleging a violation of natural justice.
The court considered arguments from both parties and noted that while the petitioner may have provided misleading information, the short response time and lack of a personal hearing constituted a violation of natural justice. The court set aside the impugned order and directed the case to be remitted back to the respondents for a fresh order on merits after hearing the petitioner. The respondents were instructed to pass a speaking order within eight weeks, allowing the petitioner to file a reply to the reasons given before completing the assessment. The writ petition was disposed of with these observations, and no costs were awarded.
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