2024 (4) TMI 602 - HC - Income Tax

Assessment Order Quashed Over Fairness Concerns; Petitioner to File Returns & Comply Within 30 Days.

M/s. Ashok Logistics Systems Versus The Principal Commissioner Of Income Tax, Hubballi, Government Of India, Government Of India, Ministry Of Finance, Income Tax Department, The Assistant Commissioner Of Income Tax, Circle 1 (1) And Tps, Hubballi.

The HC quashed the assessment order and demand notice issued under Section 148 of the Income Tax Act, 1961, due to procedural fairness concerns. Despite ... Validity of Reopening of assessment - as argued notices were not served on the petitioner - HELD THAT:- The documents that are relied on by the petitioner disclose that respondent had issued various notices to the petitioner calling upon him to file his returns for the year 2014-15. Even though it is contended that notices were not served on the petitioner, the same cannot be accepted, in view of the specific averment made in the assessment order regarding service of notices. Therefore, the contention taken by the petitioner is that, he was not given sufficient opportunity of being heard and the order in question is an ex-parte order, also cannot be accepted. Annexure-D was came to be passed on 19.03.2022 and before passing the order, several notices were issued to the petitioner. In spite of that, he has not chosen to appear before the authority and not complied the demand made therein. The next ground urged by the petitioner that the order in question was passed during Covid-19 also cannot be accepted. Under such circumstances, even though we do not find any reason to entertain the petition, only to afford one more opportunity to the petitioner of being heard, we deem it appropriate to quash the assessment order produced, and petitioner is directed to file income tax returns for the assessment year 2014-15 with respondent No. 3 within 30 days from today and to cooperate in compliance of the procedure in terms of the Act. Issues involved: Impugning assessment order and demand notice u/s 148 of the Income Tax Act, 1961 for non-filing of returns for the assessment year 2014-15.Summary:Petitioner's Contentions:The petitioner, a partnership firm engaged in logistics services, could not file income tax returns for the assessment year 2014-15 due to Covid-19 restrictions. Despite notices issued under Section 148 and 142(1) of the Act, the petitioner was unable to respond or provide necessary documents. An ex-parte assessment order was passed without adequate opportunity to represent the case, leading to the issuance of a demand notice. The petitioner sought to quash the assessment order and demand notice to submit the returns upon being granted a reasonable opportunity.Respondents' Arguments:The respondents contended that the petitioner failed to submit returns despite multiple notices and opportunities provided under Sections 142(2) and 143(1) of the Act. Notices were duly served, including the show-cause notice under Section 144, which warned of assessment completion if no response was received. The assessment order revealed an escape from assessment under Section 147, with notices issued and served on the petitioner without any compliance.Court's Decision:The court noted the petitioner's claims of non-service of notices but rejected them based on the assessment order's specific mention of notice service. Despite the petitioner's arguments of lack of opportunity and the impact of Covid-19, the court found no merit in granting relief. However, to ensure fairness, the court quashed the assessment order and demand notice to afford the petitioner another opportunity to be heard. The writ petition was allowed, directing the petitioner to file income tax returns within 30 days and cooperate with the authorities in compliance with the Act.