Reopening Assessment Without Furnishing Information Violates Principles Of Natural Justice: In Calcutta High Court

The Calcutta High Court bench of Honourable Justice T.S. Shivagnanam and Honourable Justice Bivas Pattanayak has held in the case of Maharaja Edifice Pvt. Ltd. Vs. Union of India & Ors. (M.A.T. 917 of 2022 with IA no. CAN 1 of 2022) that failure to furnish information based on which assessment was reopened is a violation of principles of natural justice.

Facts of the case:

The assessment order issued pursuant to the provisions of the Income Tax Act of 1961 has been contested by the appellant/assessee on the grounds that it was issued in contravention of the laws of natural justice.

According to a notice issued by the Assessing Officer pursuant to Section 148A(b), it appears that income subject to tax may have evaded assessment within the meaning of Section 147 of the Act. According to the notice, Annexure A contains the specifics of any information and inquiries that were made, if any. The assessee discovered there was no Annexure A attachment when he received the notification.

Because of this, the assessee provided his response via electronic procedures, pointing out that they had not provided the Annexure that was purportedly attached to the notice pursuant to Section 148A. (b). The Assessing Officer did not respond, so a second notice was sent in accordance with Section 148A(b) of the Act.

The government argued that a second notice was sent since the initial notice only offered five days’ notice, falling short of the required minimum of seven days.

It has been noted that Annexure A, which contains the department’s information, is included with the notification. Despite being named “case related information detail,” Annexure A was empty of any material. The assessee submitted the response via electronic proceedings. The assessee’s response was accompanied by a number of papers. The order was then issued in accordance with Section 148A (b) of the Income Tax Act.

Court Findings:

“It is unexpected to learn that the officer provided information for the order that spans over seven pages. The notification dated 21.03.2022 only included case-related information details, and this information was not sent to the assessee in the first instance “Observed the court.

The appellant was not given all of the information on which the assessment was asked to be reopened, according to the court, which found a violation of natural justice standards. The Section 148A Clause (d) order is reversed, and the case was remanded to the Assessing Officer in the capacity in which he issued the Section 148A notice (b).

The court instructed the assessee to notice the details provided in the order dated 7.04.2022, which was issued in accordance with Clause (d) of Section 148A, as they will serve as the foundation for the reopening. Within ten days of receiving the order, the assessee was instructed to lodge any objections.

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Judgement Reviewed By Manju Molakalapalli.

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