The Gujarat High Court quashed income tax notice issued on violation of natural justice principles, thereby granting relief to Triokaa Pharmaceuticals Limited.
By way of the writ petition under Article 226 of the Constitution of India, the petitioner has prayed for quashing and setting aside the notice dated 06.03.2020 under Section148 of the Income Tax Act, 1961, along with the orders dated 31.08.2021 disposing off the objections and also set aside the impugned Assessment Order dated 19.09.2021 and the subsequent Demand Notice under Section 156 of Income Tax Act.
The respondent issued notice under Section 148 of the Income Tax Act on 06.03.2020. The petitioner-assessee by letter dated 11.03.2020, challenged the validity of the said notice followed by a letter dated 30.05.2020 stating that the petitioner has filed the return of income in response to the notice under Section 148 of the Income Tax Act with a request to provide the copy of the reasons recorded for reopening of the case.
The petitioner challenged the issuance of the notice under Section 142(1) of the Income Tax Act without the issuance of the speaking order disposing off the objections against reasons recorded dated 16.07.2021 by the respondent vide letter dated 12.02.2021 and duly complied with the factual details sought in said notice without prejudice to the legal contentions highlighting the blatant irregularities in the present case at hand.
A Division Bench of Justices Biren Vaishnav and Justice Bhargav D Karia observed that “The petitioner filed an application for adjournment which was updated on ITBA portal however the Assessment Order dated 19.09.2021 under Section 143(3) read with Section 144B and 147 of the Income Tax Act was passed by making an addition of the commission paid to foreign nationals / agents amounting to Rs.63,74,736/- without deduction of tax (TDS) and raised a demand of Rs.5,13,54,720 vide demand notice issued under Section 156 of the Income Tax Act,1961. The exercise on the face of it was undertaken in gross violation of principles of natural justice.”
“The narration hereinabove would indicate that since the notice under Section 148 of the Income Tax Act,1961 dated 6.3.2020 was flawed for the reasons aforesaid, the consequential effect thereof would be that the order disposing off objections dated 31.8.2021 and the Assessment Order dated 19.09.2021 are held to be bad” the Court concluded.
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