TaxTMI 
TaxTMI 
2026 (8) TMI 1840
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....) read with Section 144B of the Income-tax Act, 1961 ("the Act") for Assessment Year 2024-25, together with the consequential Computation Sheet, Notice of Demand under Section 156 of the Act and the Show Cause Notices issued for levy of penalty under Sections 270A and 271AAC of the Act. 3. The principle challenge raised by the Petitioner is that the impugned Assessment Order has been passed in gross violation of the principles of natural justice, without application of mind and contrary to the procedure prescribed under Section 144B of the Act and the Standard Operating Procedure ("SOP") issued by the Income-tax Department. 4. The learned Counsel for the Petitioner, canvassed the following submissions: i. The Assessing Office....
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....e hands of the alleged purchaser had not been submitted by the Assessee. It is submitted that this detail was never called for from the Petitioner. It is further submitted that even the quantum of the sale proceeds has been incorrectly recorded in the Assessment Order; v. It is submitted that, if any improvement is to be made to the show cause notice, then the least which is expected is to issue a further notice and seek clarification instead of making an addition on mere surmises; vi. It is further submitted that despite the Petitioner seeking a personal hearing, the same was not granted. On 19th March 2026, the notice for a personal hearing was issued at 9.30AM in the morning and calling the Petitioner to appear at 3.00 ....
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....s of natural justice, but also in an arbitrary manner and without application of mind. 7. The SOP issued by the Income-tax Department, which is available at pages 216 to 233 of the Petition, clearly provides that a Show Cause Notice is to be drafted only after conducting all necessary inquiries and verification and after collecting all relevant information. The same is in paragraph N.1.1 on page 228 which is brought out hereunder: "N.1.1 SCN shall be drafted after conduct of all necessary enquiry/verification and collection of relevant information;" 8. The Petitioner is correct in contending that after issuance of the notice under Section 142(1) of the Act dated 11th August 2025, no further notice was issued despite the fact ....
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....otice seeking justification for the difference between the receipts reflected in the bank account and the receipts offered to tax, without any prior query in that regard, would not stand the test of law. 10. We also find merit in the contention of the Petitioner that the receipts received from the partnership firm were capital in nature and has not been considered at all by the Assessing Officer. The Petitioner had duly replied to the Show Cause Notice on 5th February 2026. If any further information was required regarding the nature of the receipts received from the partnership firm, the Assessing Officer could have issued a further notice to the Petitioner before passing the Assessment Order. The reply of the Petitioner is dated 5th Fe....
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....een considered and found to be unsatisfactory. 12. On the issue of the sale proceeds arising from the sale of shares of NSE Limited, we find that the Show Cause Notice required the Petitioner to provide details of acquisition of the unlisted shares and a certificate from a Chartered Accountant regarding the valuation of the shares. The Petitioner duly replied to the said requisitions by her replies dated 30th January 2026, at Exhibit F, and 5th February 2026, at Exhibit G. The Petitioner submitted that valuation was not possible since the balance sheet of NSE was not available in the public domain at that point of time. The Petitioner also furnished details of her acquisition cost for the purpose of computing the capital gains. In the As....
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....the Petitioner. 14. The Petitioner is correct in contending that a high-pitched assessment has been made, whereby her returned income of Rs. 1,99,71,540/- has been converted into an assessed income of Rs. 62,98,25,631/-. As set out above, the impugned order is completely arbitrary, has been passed without application of mind, and is in gross violation of the principles of natural justice. We, therefore, have no hesitation in setting aside the impugned Assessment Order dated 26th March 2026 and the consequential Notice of Demand dated 26th March 2026 and the Show Cause Notices for levy of penalty dated 26th March 2026. 15. We, now, remand the matter back to the Assessing Officer, who shall strictly act in accordance with the procedure ....