The Kerala High Court quashed the order passed under section 148 of the Income Tax Act, 1961 denying the opportunity to file an objection on Show Cause Notice (SCN) as sending real-time alert is a mandatory requirement under the Income Tax Act.
Hosdurg Beedi Workers Industrial Service Type Co-Operative Society Ltd, the petitioner is a Co-operative Society, registered under the Kerala Co-operative Societies Act. The 1st respondent had issued a notice under Section 148 A(b) of the Income Tax Act, 1961 (“Act”), alleging that the petitioner’s chargeable income for the assessment year 2018-19 has escaped assessment. The petitioner was unaware of the notice and could not file its objection.
Subsequently, the 1st respondent issued an order under Section 148A(d) of the Act stating that as the petitioner did not respond to the notice, it is assumed that the petitioner has no explanation to offer. With the afore-cited finding, the 1st respondent issued a notice under Section 148 of the Act.
The petitioner filed its return of income on 22.04.2022 declaring total income as ‘nil’ in response to Ext.P3 notice. It is then that the petitioner came to learn about the issuance of notice. The petitioner submitted a reply to the same. Then, the 2nd respondent completed the assessment on 11.03.2023 and passed the assessment order making an addition of Rs.3,33,49,052/-.
It was found by the petitioner that a show-cause notice along with a draft assessment order was issued on 15.02.2023, calling for objections to be filed on or before 22.03.2023. The show cause notice was not served on the petitioner as contemplated under sub-clause (ii) of sub-section (7) of Section 144B of the Act before completing the assessment.
The said provision specifically provides that every notice has to be placed in the registered account of the assessee or sent to his registered email or mobile phone number, which is to be followed by a real-time alert. The sending of the real-time alert is a mandatory requirement, failing which the notice becomes ineffective and notice shall not be treated as served.
The petitioner was denied an opportunity to file its objection to the show cause notice and draft assessment order. The notice was issued by the 1st respondent without giving seven clear days to the petitioner to reply to the show cause notice as per the mandate under Section 148A(b) of the Income Tax Act, 1961.
A perusal of the notice issued under Section 148A(b) shows that the notice dated 18.03.2022 was sent to the petitioner with a requirement to submit a reply on or before 24.03.2022, which is short of seven clear days and in turn is against the statutory mandate under Section 148A(b) of the act.
Sri. Arun Raj, the Counsel appeared for the petitioner and Sri. Christopher Abraham, the Standing Counsel appeared for the respondents.
The single judge bench of Justice Dinesh Kumar Singh quashed the notice and assessment order and directed to serve the petitioner with a fresh notice following the mandate under Section 148A(b) of the Act.
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