Income Tax Assessee Who Failed To Avail Option To Request Personal Hearing Can't Claim That Personal Hearing Was Not Provided: Madras HC
Mehak Dhiman
10 Oct 2024 4:00 PM IST
The Madras High Court ruled that if an assessee does not take advantage of the opportunity to request a personal hearing from the department, they cannot later claim that they were denied a personal hearing.
The Bench of Justice Krishnan Ramasamy observed that “……though the department has given liberty to the assessee to request for personal hearing, the assessee failed to avail such an option. Therefore, the question of violation of natural justice will not arise.”
Section 148A(b) of the Income Tax Act, 1961 provides that the assessing officer must issue a notice to the taxpayer under Section 148A(b), providing information and adverse material suggesting that income has escaped assessment.
Section 144b of the Income Tax Act, 1961 prescribes the process for assessments conducted electronically, without any direct interaction between the taxpayer and the tax authorities.
The assessee/petitioner, received a show cause notice on 31.03.2022 under Section 148A(b) of the Income Tax Act for the re-opening of their assessment for the financial year 2018-19. The assessee inadvertently failed to submit their response to this notice. A second show cause notice was issued on 06.03.2023, to which the assessee replied on 08.03.2023. However, without granting a personal hearing, the assessment order was passed on 17.03.2023.
The assessee has challenged the order passed by the (1st Respondent) Assessment Unit/Verification unit/Technical Unit/Review Unit Income Tax Department.
The assessee submitted that the assessee has disclosed the sum of Rs.91,80,856/- in his return, but the return was filed belatedly in terms of second notice issued under Section 144b. The department refused to accept the reply by considering the entire income as asset. The assessing officer passed the impugned order without considering the asseesee's reply dated 08.03.2023.
The department submitted that two show cause notices were issued and the assessee refused to file reply to the first show cause notice. Thereafter, reply to the second show cause notice was considered and the assessment order has been passed.
The bench observed that after considering the reply, the assessment officer decided to take entire receipt as shown in the ITR as income of the assessee and decided to pass assessment order. On the other hand, the assessee filed the returns taking 28% as profit out of the total receipt in terms of Section 44A of the Act. When the (respondent) department rejected the reply of the assessee and decided to take entire receipt as income and proceeded to pass the assessment order, the department ought to have afforded an opportunity of personal hearing to the assessee.
The bench after looking into the second show cause notice observed that though the (respondent) department has given liberty to the assessee to request for personal hearing, the assessee failed to avail such an option. Therefore, the question of violation of natural justice will not arise.
In view of the above, the bench dismissed the petition.
Counsel for Petitioner/ Assessee: R. Sivaraman
Counsel for Respondent/ Department: Dr. B. Ramaswamy
Case Title: M.S. Mohamed Siddique & Co. v. The Assessment Unit/Verification unit/ Technical Unit/Review Unit Income Tax Department
Case Number: W.P.No.35518 of 2023
