Non-Participation in Income Tax Proceedings: Calcutta HC Dismisses Assessment Order Passed during Pendency of Writ Petition [Read Order]

The Calcutta High Court dismissed an assessment order passed during pendency of writ petition, taking into consideration the non-participation of the petitioners, SKP Infrarealty Private Limited & Anr, in the income tax proceedings

In the writ petition the petitioners have challenged both the orders under Section 148A(d) of the Income Tax Act, 1961 and impugned final assessment order under Section 147 of the Income Tax Act, 1961. The orders under Section 148A(d) of the Income Tax Act, 1961 and impugned final assessment order under Section 147 of the Income Tax Act, 1961 was passed during the pendency of the writ petition.

It is the case of the petitioners that petitioners did not participate in the proceedings subsequent to order under Section 148A(d) of the Income Tax Act by praying for adjournment before the Assessing Officer on the ground of pendency of the writ petition by praying for adjournment which was not considered by the Assessing Officer by contending that there was no stay by the High Court.

Section 147 of the Income Tax Act empowers AO to reopen the assessment proceedings when they understand either a part or the whole income is not considered during the assessment. However, before an AO can reopen the assessment proceeding per Section 147 of the Income Tax Act, there must be a proper reason to believe that either a whole or a part of the income has escaped assessment.

Another point to consider is that AO has to verify if the income has escaped assessment after the closure of assessment proceedings. For instance, during the initial proceeding, the AO may have failed to consider the depreciation factor or a specific income portion. 

A Single Bench comprising Justice Md Nizamuddin observed that “In the interest of principle of natural justice the impugned order under Section 147 of the Income Tax Act relating to assessment year 2014-2015 is set aside and the matter is remanded back to the Assessing Officer concerned to proceed afresh from the stage subsequent to notice under Section 148 of the Income Tax Act and conclude the proceedings and pass final order within twelve weeks from the date of communication of the order.”

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