General Commercial Agencies Vs Assessment Unit (Madras High Court)
In the case of General Commercial Agencies vs Assessment Unit, the petitioner challenged an income tax assessment order dated 23.03.2023, concerning the assessment year 2018-2019, issued by the Income Tax Department. The reassessment proceedings were initiated following a notice under Section 148 of the Income Tax Act, 1961. Subsequent notices under Sections 143(2) and 142(1) were issued in November 2023. The contentious issue arose when a show cause notice (SCN) dated 13.03.2024, raised for the first time, an allegation concerning unexplained credits amounting to Rs. 9.50 crore in the petitioner’s bank account. The notice proposed to treat these credits as unexplained income under Section 69A, subject to taxation under Section 115BBE of the Income Tax Act.
The petitioner responded to the SCN requesting additional time to address the allegations due to the short deadline of three days provided initially. Although a brief extension until 19.03.2024 was granted, the petitioner sought more time, which was denied. Consequently, the assessment order was passed on 23.03.2024, without providing further opportunity to the petitioner to furnish a detailed reply. The petitioner argued that the short timeframe violated the principles of natural justice as the substantial sum and the new allegations required a thorough response. The petitioner also pointed out that an official communication, digitally signed late at night on 20.03.2024, adjourned the case to 21.03.2024, further compounding the challenge of responding effectively.
