2024 (8) TMI 117 - HC - Income Tax

Re-assessment Order Quashed: Court Cites Inadequate Hearing Opportunity During Covid-19; Case Sent Back for Review.

The HC quashed the re-assessment order dated 21.09.2021 due to inadequate opportunity for the petitioner to be heard, citing communication issues during ... Reopening of assessment u/s 147 - lack of opportunity to protest the proceedings - non providing hearing to assessee - petitioner submits that all subsequent communications were issued to an email address, which was not being used by the petitioner’s accountant and, therefore, the petitioner did not receive the notices and could not reply thereto - HELD THAT:- The documents on record reveal that the petitioner replied to the notice issued under Section 148 of the Act on 23.01.2020. The petitioner also replied to the notice dated 15.04.2021 under Section 142 (1) of the Act. These notices were issued to the petitioner at the following e-mail address: [email protected]. The subsequent e-mails, including the e-mail issued on 21.04.2021, were issued to the following address: [email protected]. It should also be noticed that these communications were issued during the second wave of the Covid-19 pandemic. The impugned re-assessment order came to be issued in the above facts and circumstances without hearing the petitioner. Therefore, the impugned reassessment order and proceedings consequential thereto call for interference. For reasons set out above, the impugned re-assessment order and the demand notices issued pursuant thereto are quashed - Thus, matter is remanded for re-consideration. The petitioner is permitted to issue a response both in relation to the disposal of the petitioner’s objections and to the show cause notice. Such consolidated response shall be submitted within (2) two weeks from the date of receipt of a copy of this order. Issues:Challenge to re-assessment order and proceedings due to communication issues and lack of opportunity for the petitioner.Analysis:The petitioner challenged a re-assessment order and subsequent proceedings initiated under Section 148 of the Income Tax Act, 1961. The petitioner claimed that due to communication problems, notices were not received as they were sent to an email address not used by the petitioner's accountant. The petitioner only became aware of the proceedings upon receiving a show cause notice by post. The petitioner sought an opportunity to contest the proceedings.In response, the Senior Standing Counsel for the respondents argued that the petitioner did not respond to notices sent to the original email ID provided, leading to the usage of the ID registered with the Income Tax Department for further communication. Referring to Section 144 B of the Act, it was argued that notices can be validly issued through the portal accompanied by an email to the registered ID. The counsel contended that since statutory requirements were met, no interference was warranted.The court noted that the petitioner did reply to certain notices sent to the email address [email protected] but subsequent communications were directed to a different address, [email protected]. It was highlighted that these communications occurred during the second wave of the Covid-19 pandemic. The re-assessment order was issued without providing the petitioner with an opportunity to be heard, leading to the court's decision to quash the order and remand the matter for reconsideration.Consequently, the court quashed the re-assessment order dated 21.09.2021 and directed the matter to be re-considered. The petitioner was granted the opportunity to respond to objections and the show cause notice within two weeks. The respondents were instructed to enable the portal for the petitioner's access. The assessing officer was directed to provide a reasonable opportunity, including a personal hearing, and issue a fresh assessment order within three months from receiving the petitioner's reply. The writ petition was disposed of without costs, and connected miscellaneous petitions were closed.