Reassessment proceedings under Section 147 quashed for procedural violations and time-bar issues

Udayakumar Versus The Income Tax Officer, Non-corporate Ward – 17 (7), Chennai

Udayakumar Versus The Income Tax Officer, Non-corporate Ward – 17 (7), Chennai - TMI Issues Involved:
1. Validity of the notice under Section 148 A (b) on grounds of limitation.
2. Violation of principles of natural justice in serving the notice.
3. Sustainability of the impugned order on the limitation aspect.

Summary:

1. Validity of the Notice under Section 148 A (b) on Grounds of Limitation:
The petitioner challenged the notice dated 23.03.2022 issued under Section 148 A (b) of the Income Tax Act, 1961, contending it was beyond the period of limitation. The court noted that the period of limitation for the assessment year 2015-16 ended on 31st March 2021. Thus, the impugned proceedings were not sustainable on the limitation aspect, as the Department failed to take appropriate action within the six-year period, which is mandatory.

2. Violation of Principles of Natural Justice in Serving the Notice:
The petitioner argued that the notice dated 23.03.2022 was received only on 28.03.2022, providing insufficient time to respond. The court observed that Section 148 A (b) requires a minimum of seven days for the assessee to furnish an explanation. The respondent's contention that the notice served through the e-portal on 23.03.2022 was sufficient was rejected. The court held that service of notice by post or courier is mandatory, and additional electronic service cannot replace it. Consequently, the notice dated 23.03.2022 was quashed for violating the principles of natural justice.

3. Sustainability of the Impugned Order on the Limitation Aspect:
The court reiterated that the limitation period for the assessment year 2015-16 had expired, making the impugned proceedings unsustainable. The court emphasized that the Income Tax Department cannot indefinitely hold an assessee accountable without timely action.

Conclusion:
The Writ Petition was allowed, quashing the impugned notice dated 23.03.2022 and all consequential proceedings. The court noted that if the petitioner still holds the deposited amount, the respondent-Department may proceed in accordance with law for subsequent years if permissible. No costs were awarded, and connected Miscellaneous Petitions were closed.