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

The appellant/assessee has challenged the assessment order passed under the provisions of the Income Tax Act 1961 on the ground that it has been passed in violation of the principles of natural justice.

The Assessing Officer issued a notice under Section 148A (b) stating that he has information which suggests that income chargeable to tax has escaped the assessment within the meaning of Section 147 of the Act. The notice stated that the details of the information and enquiry, if conducted, are enclosed with the notice in Annexure A. On receipt of the notice, the assessee found there was no attachment as Annexure A. Therefore, the assessee submitted his response through e-proceedings, pointing out that they had not furnished the Annexure said to have been appended to the notice under Section 148A (b). There was no reply given by the Assessing Officer but another notice under Section 148A (b) of the Act was issued.

The department contended that a second notice was issued as the first notice did not provide the minimum time of seven days as it had provided only five days' time. Along with the notice, it has been stated that information available to the department is enclosed in Annexure A. The Annexure A did not contain any information, but it is titled as "case related information detail." The assessee had filed the response through e-proceedings. The assessee attached various documents along with their response. Thereafter, the order was passed under Section 148A (b) of the Income Tax Act.

"It is surprising to find that in the order the officer has furnished information which runs to more than seven paragraphs. This information was not furnished to the assessee at the first instance and what was appended to the notice dated 21.03.2022 was only case-related information details," the court noted.

The court held that there had been a violation of principles of natural justice as the appellant was not furnished with full information based on which the assessment was sought to be reopened. The order under Section 148A Clause (d) is overturned, and the matter was remanded to the Assessing Officer to the position when he issued the notice under Section 148A(b).

The court directed the assessee to take note of the information mentioned in the order dated 7.04.2022 passed under Clause (d) of Section 148A as the basis for reopening. The assessee was directed to submit their objections within 10 days from the date of receipt of the order.

Case Title: Maharaja Edifice Pvt. Ltd. Vs. Union of India & Ors.

Case No: M.A.T. 917 of 2022 with IA no. CAN 1 of 2022

Citation: 2022 LiveLaw (Cal) 278 

Dated: 12.07.2022

Counsel For Appellant: Advocate Himangshu Kr. Ray

Counsel For Respondent: Advocate Smita Das De

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