Re-assessment order quashed for typographical mistake in reasons recorded
In a recent judgment, Hon’ble High Court of Jharkhand held that ex-parte re-assessment order passed u/s 147 and notice u/s 148 of the Income Tax Act, 1961 cannot be sustained in the eye of law especially in view of the fact that the reasons recorded for reopening had a typographical error.
ABCAUS Case Law Citation:
ABCAUS 4117 (2024) (06) HC
In the instant case, the Petitioner assessee had filed a Writ Petition praying for quashing and setting aside the assessment order passed u/s 147 read with section 144B of the Income Tax Act, 1961 (‘the Act), in pursuance to notice u/s 148 being passed in violation of Principle of Natural Justice and in disregard to the statutory provision of section 144B(7)(vii) of the Act by not giving opportunity of personal hearing, by Video Conferencing.
The petitioner was an individual, assessed to income tax and she filed her return of income for the relevant AY declaring interalia, long term capital gain on sale of Land. The return was accepted.
Later, a Notice u/s 148 was issued for reopening the case. Subsequently, notice u/s 143(2) r/w section 147 of the Act, was issued by the AO giving the reasons recorded for reopening. As per reasons recorded it was mentioned that the assessee had made cash deposit in her bank account with SBI and the details of such deposits remained unexplained.
Notice u/s 142(1) was issued by NFAC to the Petitioner requiring her to furnish accounts and documents as specified. The Petitioner duly furnished details and documents as required. The e-filing portal allows uploading of only 10 documents at a time. Therefore, the Petitioner complied the requirement of the said notice in 3 parts, along with its submission by e-filing on the IT portal, interalia, submitting that she had not deposited the cash amount as mentioned in the notice in account. with SBI. The Petitioner specifically mentioned that she does not have any operative account in SBI.
Subsequently a Show Cause Notice was issued as to why the proposed variation should not be made, in respect of unexplained cash deposit u/s 69A of the said amount of cash deposit in the alleged bank account with SBI rejecting the claim on the ground of absence of corroborating documentary evidence, regarding her claim of sale of plot in order to explain source of cash deposit.
According to the petitioner, she had duly filed the copies of Land purchase deeds and land sale deeds in 3 parts at e-filing portal in respect of entire of sale of lands. The petitioner filed her detailed objections against the aforesaid proposed variation before the NFAC. The petitioner also raised a Video Conferencing request with a preferred date which was evident from the confirmatory e-mail received from email id communication@cpc.incometax.gov.in.
However, without giving any opportunity of personal hearing through Video Conferencing as requested by the Petitioner, immediately on the very next day, in utter disregard to the Principles of Natural Justice and the statutory provisions of Faceless assessment regarding providing of personal hearing to make oral submissions as per provisions of clause (vii) of sub-section (7) of section 144B of the Act and without taking into consideration the submissions explanations / documents filed by the Petitioner with an open mind, an ex-parte assessment order u/s 147 read with section 144B of the Act was passed and uploaded at the e-filing account of the Petitioner at the Income Tax portal, wherein the assessment order was finalized mainly on the lines of the show cause notice making addition of unexplained cash deposit u/s 69A of the Act raising huge tax demand and also initiating penalty proceedings of concealment u/s 271(1)(c).
Before the Hon’ble High Court, petitioner submitted that admittedly, the petitioner had not deposited any cash in any State Bank of India and moreover the Petitioner filed her objections clarifying that she does not have any operative account with State Bank of India, neither she has deposited any amount therein. The Faceless Assessment Centre without making any enquiry and without taking any cognizance of the objection.
Further, it was submitted that even though the request of the petitioner for VC was confirmed by the NFAC, no opportunity of personal hearing was given which was a glaring example of violation of Principles of Natural Justice.
Before the Hon’ble High Court, the Income Tax Department filed a counter affidavit accepting the source of receipt of cash and stated that it was apparent that the Petitioner used an intermediary/agent to sell her land and received the consideration in cash from the intermediary.
Further, with respect to alleged deposit in SBI, the ITD made an excuse that there was typographical mistake in recording the reasons. It was submitted that a mere typographical error in this case does not alleviate the fact that the assessee, received cash of the same amount and thus does not vitiate the proceedings.
The Hon’ble High Court observed that the Petitioner’s case was reopened only on the ground that the assessee has made a cash deposit ……………. in the bank account maintained with State Bank of India.
The Hon’ble High Court further noted that the Faceless Assessment Centre without making any enquiry and without taking any cognizance of the above replies and the documents filed had issued the Show Cause Notice for the proposed variation.
It was also noted that request of the petitioner for VC was confirmed and even then also no opportunity of personal hearing was given and on the very next day in utter disregard to the Principles of Natural Justice and, without taking into consideration the submission and documents filed by the petitioner an ex-parte assessment order had been passed and uploaded at the e-filing account of the petitioner.
The Hon’ble High Court observed that ITD took an excuse that there was a typographical mistake in recording the reasons; thus ITD himself accepted that the reasons, as recorded were not correct.
The Hon’ble High Court noted that the Co-ordinate Bench of the High Court had already dealt in detail the issue involved in this case i.e., regarding admission of excuse by the department due to typographical error and oversight the sale of land has been typed as purchase of land. However, the Hon’ble High Court did not accept by observing that it is well settled principles with regard to reassessment. A reassessment proceeding is to be adjudged on the basis of “reason to believe” disclosed to the Assessee and the said reasons cannot be supplemented by the revenue as the reasons have to speak for themselves. No substitution or deletion is permissible. No additions can be made to those reasons.
Accordingly, the Hon’ble High Court quashed the Assessment Order passed u/s 147 and the notice u/s 148. However, the Revenue was given liberty to initiate a fresh proceeding for reassessment for wrongful claim of exemption by the petitioner in accordance with law.
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