Income Tax Reassessment Order issued Despite Submission of Relevant Documents alleging Unreadability: Madras HC sets aside Order [Read Order]

The Madras High Court set aside the reassessment order issued under Section 147 r.w.s. 144 and 144B of Income Tax Act, 1961. The order was issued despite submission of the relevant documents. The court found the non-consideration of the petitioner's response and attachments a clear violation of natural justice principles, rendering the assessment order unsustainable.

A writ petition has been filed challenging an assessment order for the assessment year 2015-16, citing a breach of fundamental principles of natural justice. The case centred around the issuance of an order dated 01.04.2022 under Section 148A(b) of the Income-tax Act, leading to the reopening of the petitioner's assessment. A contemporaneous notice under Section 148 was served, prompting a response from the petitioner.

The Petitioner, Praveen Sanjiv diligently replied to the notice, followed by the issuance of a draft assessment order alongside a show cause notice dated 12.03.2024. Responding promptly, the petitioner attached several documents to their reply on 14.03.2024. However, in an unexpected turn, the second respondent notified the petitioner on 15.03.2024 that the attached documents were deemed unreadable. Despite this setback, the impugned assessment order was issued on 26.03.2024, raising questions regarding procedural fairness.

The counsel for the petitioner submitted the assessment proceedings arised from alleged purchases of immovable property. The petitioner admitted to one transaction and provided requisite documentation over a period of time.

The counsel asserted that all pertinent information, including the income tax returns of the petitioner's parents, was duly attached. However, the assessment order was issued without due consideration of these attachments, prompting the petitioner to seek redressal.

Mr. Prabhu Mukunth Arunkumar, representing the respondents, argued that the petitioner was afforded ample opportunities to explain the transaction but failed to provide readable documents, thereby hindering the assessment process.

The court noted that the petitioner, on record, had submitted a comprehensive response on 14.03.2024, including attachments such as the IT acknowledgments of the petitioner's parents, income sources, and bank statements. Despite these efforts, the assessment order was issued based on the alleged unreadability of the documents attached to the petitioner's response.

Thus, the bench of Justice Senthilkumar Ramamoorthy found the non-consideration of the petitioner's response and attachments a clear violation of natural justice principles, rendering the assessment order unsustainable. Consequently, the impugned assessment order dated 26.03.2024 has been set aside, and the matter remanded for reconsideration from the stage of the petitioner's response to the show cause notice cum draft assessment order.

Furthermore, the court directed the respondents to facilitate the petitioner in uploading the reply and relevant attachments within two weeks. Upon receipt, the second respondent is mandated to provide a reasonable opportunity, including a personal hearing through video conference, and issue a fresh order within three months. Accordingly the wit petition was disposed of.

Mr. G. Ashokapathy for Pass Associates appeared for the petitioner.

To Read the full text of the Order CLICK HERE

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