Reassessment Order Passed Ex Parte After No Response to Notice: Madras HC Dismisses Writ as Infructuous, Permits Appeal [Read Order]

In a recent decision, the Madras High Court dismissed a writ petition challenging an ex parte reassessment order passed under Section 147 of the Income Tax Act, 1961, holding that the petitioner had failed to respond to the statutory notice issued under Section 148, and that the reassessment proceedings were conducted in accordance with law.

The petitioner, A H Engineering Contractors, approached the Madras High Court under Article 226 of the Constitution, seeking to quash a reassessment order passed under Section 147 read with Section 144B of the Income Tax Act, 1961.

The reassessment was initiated based on information available in Form 26AS, which reflected substantial contract receipts not disclosed in the original return of income.

The Income Tax Department issued a notice under Section 148, initiating reassessment proceedings for the relevant assessment year. Despite service of notice, the petitioner failed to respond or participate in the proceedings.

The AO proceeded to pass an ex parte order, relying on third-party data and treating the receipts as taxable income. A demand of ₹1.2 crore was raised.

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The petitioner challenged the reassessment order on the ground that it was passed without granting a proper opportunity of hearing. It was contended that the order violated principles of natural justice and was liable to be set aside.

The petitioner also argued that the reassessment was based on incorrect assumptions and that the data relied upon were not corroborated.

The Department, in its counter, submitted that the notice had been duly served and that the petitioner had chosen not to respond. It was further argued that the reassessment was conducted in accordance with the law and that the petitioner had an alternate remedy under the Act by way of appeal before the Commissioner (Appeals).

The bench of Justice C Saravanan explained that the Income Tax Act provides a comprehensive appellate mechanism, including the right to appeal against reassessment orders.

It held that the writ petition was not maintainable in view of the availability of an efficacious alternate remedy. The Court also observed that factual disputes regarding the correctness of the assessment could be better adjudicated by the appellate authority.

Accordingly, the court dismissed the writ petition as infructuous and granted liberty to the petitioner to file a statutory appeal before the Commissioner (Appeals).

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