The Income Tax department only granted 48 hours to respond to the Income Tax Show Cause Notice ( SCN ) to clarify Rs. 79 lakhs addition, thus the Madras High Court set aside the order and remanded the matter for reconsideration.
The bench of Justice Senthilkumar Rammaoorthy observed that “the time limit provided in the show cause notice was two days. This is clearly not reasonable. Consequently, the impugned assessment order cannot be sustained.”
Gudiyatham Muniraj Ashokkumaran, the assessee filed a writ petition challenging the Income Tax Assessment order on the grounds of violation of principles of natural justice. The assessee filed the return of income for the assessment year 2015-16 on 24.03.2018. Re-assessment proceedings were initiated by issuing notice under Section 148.
Further, the assessee filed their income tax return on 12.07.2023. Subsequently, the Income Tax Department issued notices under Section 143(2) and Section 142(1) of Income Tax Act, 1961 requesting documents related to the return.
The assessee responded on 15.02.2024, 08.03.2024, and 14.03.2024. A show cause notice dated 24.03.2024 was then issued, asking the petitioner to justify why an additional Rs. 79,08,458/- should not be added to their total income. The assessee was required to respond by 26.03.2024. Finally, the assessment order in challenge was issued on 29.03.2024.
The assessee’s counsel submitted that the assessee was granted with only two days’ time to respond to the Income Tax SCN. Since the time provided was unreasonable, he submits that the petitioner was unable to respond. Consequently, he sought another opportunity to reply to the show cause notice.
Unlike proceedings under indirect tax laws, the re-assessment proceedings are initiated by issuing notice under Section 148. Once the assessee files the return of income in response thereto, it is incumbent on the assessee to provide a satisfactory explanation with regard to such return of income, contented the respondents’ counsel, Mr.A.P.Srinivas, Sr. SC.
He also submitted that the show cause notice does not have the significance attached thereto in proceedings under indirect tax laws.
The High Court set aside the order and remanded the matter to the assessing officer for reconsideration. The assessee was granted 15 days to respond to the show cause notice, after which the department was instructed to conduct a personal hearing and issue a revised assessment order accordingly.
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