The Madras High Court remanded the case for reconsideration, citing insufficient time given to the petitioner to address the variation in bank credits. The Income Tax Department had only allowed six days for the petitioner to respond to the discrepancies in the bank statement.
The petitioner challenged an assessment order dated 23.03.2023 for the assessment year 2018-2019. Reassessment proceedings were initiated against the petitioner, and after issuing notices under Sections 143(2) and 142(1) of the Income Tax Act, 1961, a show cause notice was sent on 13.03.2024, requiring a response by 16.03.2024.
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The petitioner requested more time to address the proposal of adding all credits in the bank statement, and an extension was granted until 19.03.2024. However, the petitioner sought further time, which was not considered, leading to the issuance of the impugned assessment order on 26.03.2024.
The petitioner’s counsel submitted that the proposed variation related to the bank statement credits was introduced for the first time in the show cause notice dated 13.03.2024, and the time provided to respond was insufficient. Additionally, the communication adjourning the case to 21.03.2024 was digitally signed late on 20.03.2024, further limiting the petitioner’s ability to respond effectively.
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Mrs. S. Premalatha, the junior standing counsel for the income tax department, contended that sufficient opportunities were provided to the petitioner, citing the notices issued under Sections 143(2) and 142(1) in November 2023.
The bench of Justice Senthilkumar Ramamoorthy found that the show cause notice dated 13.03.2024 involved an aggregate credit entry of Rs. 9,50,80,259 in the petitioner’s bank statement, proposed to be treated as unexplained money under Section 69A read with 115BBE of the Income Tax law. This issue was not raised in earlier notices, necessitating a reasonable time for the petitioner to respond. The initial three-day period, extended by another three days, was deemed insufficient, warranting interference with the assessment order.
Thus, the high court set aside the income tax assessment order and remanded the matter for reconsideration.
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