Order passed by AO before expiry of the date of hearing fixed was in violation of the principles of natural justice and cannot stand to the test of law-High Court
ABCAUS Case Law Citation:
ABCAUS 2146 (2017) (12) HC
The Challenge/Grievance:
The petitioner was aggrieved by the impugned order passed by the Assessing Officer (AO) rejecting the petitioner’s objections to a notice issued under Section 148 of the Income Tax Act, 1961 (the Act) for re-opening the assessment. The petitioner assessee had filed this writ petition under Article 226 of the Constitution of India seeking to quash the notice u/s 148 and all proceedings in furtherance thereof, including the order passed by the Assessing Officer (AO) and to forbear the AO from in any manner reassessing the petitioner’s income under Section 147 of the Act.
Brief Facts of the Case:
The petitioner was issued a notice u/s 148 of the Act proposing to reopen his case. The assessee sought the reasons for re-opening, which were furnished to him. As per the reasons, the allegation was that as per the records, the petitioner had not filed his return of income for the relevant Assessment Year and on verifying the ITS details available in the AST, it was found that the petitioner had sold immovable properties during the relevant assessment year . Apart from that, there was also an allegation that the petitioner received professional/technical services fees rendered for a company.
Therefore, the AO stated that since the petitioner had not filed return of income admitting any income from capital gains or profession, he had reason to hold that the income chargeable to tax has escaped assessment as per Section 147 of the Act.
The petitioner submitted a reply stating that as the transactions were not effected during the relevant assessment year but the one preceding it, that the petitioner had also filed his return of income, the returns was accepted and the tax has been paid. Since, there was no income for the relevant assessment year, the petitioner did not file his return
The AO, then sent a notice to the petitioner directing him to produce a copy of the profit and loss account, balance sheet and auditor’s report Under Section 44 AB of the Act for the assessment year when the sale was effected with copies of the sale deeds on a specified date to verify the petitioner’s contention.
However, the AO even before the expiry of the time specified for production of the evidences passed the impugned order.
Observations made by the High Court:
The Hon’ble High Court observed that the AO had not only granted an opportunity to the petitioner to produce the books of accounts, but also fixed a preemptory date before, which he should do. Thus, a man of ordinary prudence would be of the opinion that the Assessing Officer would definitely wait till that date as he had already fixed a date for production of records. Unfortunately, the AO appeared to be in a hurry and had passed the impugned order.
The Hon’ble High Courtopined that the facts clearly showed that there had been violation of the principles of natural justice. The petitioner having been afforded an opportunity to produce the records on or before a specified date, the AO should have waited till that date.
Regarding the contention of the Revenue that the AO himself had secured the documents from the concerned Sub Registrar and therefore, proceeded to pass the impugned order, the Hon’ble High Courtopined that it was not a convincing reply, as the officer by intimation to the assessee not only called for the copies of documents, but also the copies of the profit and loss account, the balance sheet and auditor’s report Under Section 44 AB of the Act.
The Hon’ble High Courtheld that the impugned order had been passed by the AO in violation of the principles of natural justice and cannot stand to the test of law.
Decision/ Conclusion/Held:
The writ petition was allowed, the impugned order was set aside and the matter was remitted back to the AO for a fresh consideration after providing the assessee an opportunity of personal hearing and pass a reasoned order on merits and in accordance with law.
