Validity of tax reassessment and natural justice objections: court upholds assessment after repeated extension requests and no reply

Validity of reassessment under section 147 was contested on grounds of denial of natural justice; court found petitioner repeatedly sought and received limited extensions but failed to file any reply, so the assessing authority lawfully declined further time and proceeded with an addition under section 69A, issued a demand notice and directed initiation of penalty proceedings-court declined to interfere with the assessment and ancillary notices. The decision rests on procedural compliance, abuse of adjournment requests, and permissible exercise of administrative discretion by the tax authority.

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Issues involved:
The issues involved in the judgment are the validity of the assessment order passed under Section 147 read with Section 144B of the Income Tax Act, 1961 and the penalty notice issued under Section 274 read with Section 271 (1) (c) of the Income Tax Act, 1961.

Assessment Order:
The assessment in the case was reopened based on high-value cash transactions made by the assessee, totaling Rs. 6.91 crores, with various modes of transactions. The reasons for reopening the assessment were provided to the petitioner, who responded to the notice. The assessment order determined the total taxable income to be Rs. 6,48,29,2113/- with an addition of Rs. 6,36,70,393/- under Section 69A of the Income Tax Act. A demand notice for payment of tax and initiation of penalty proceedings was also issued.

Principles of Natural Justice:
The petitioner requested multiple extensions of time to file replies to show cause notices, but failed to do so within the granted time frames. The Authority was deemed justified in not granting further time due to the petitioner's repeated delays in responding. The Court found no violation of the principles of natural justice, stating that the petitioner cannot keep asking for more time in response to successive show cause notices. The petitioner was advised to pursue the remedy of filing an appeal against the assessment order instead of approaching the Court through a writ petition.

Court's Decision:
The Court did not find grounds to interfere with the impugned order or notice. The petitioner was given permission to file an appeal within fifteen days before the Appellate Authority. During this period, no coercive steps were to be taken against the petitioner regarding the assessment order. The Appellate Authority was instructed to examine the appeal on its merits and any stay application filed along with it. The appeal should be decided on merit without considering the question of limitation, ensuring expeditious handling, preferably within two months from the date of filing the stay application.

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