Reassessment disputes: Madras HC Directs Petitioner to Pursue Appellate Remedy

Palpandi Shanthi Priya Vs ITO (Madras High Court)

Madras High Court ruled on a writ petition filed by Palpandi Shanthi Priya against the Income Tax Officer (ITO), challenging the reassessment proceedings for AY 2020-21. The petitioner, a loan recovery agent for HDFC Bank, received a notice under Section 148 of the Income Tax Act, 1961, citing income escapement. Despite submitting a detailed reply with supporting documents on 11.11.2024, the petitioner claimed that the authorities failed to consider the evidence, leading to a violation of natural justice principles. The petitioner sought relief from the High Court, arguing that the reassessment was unfair.

The respondents contended that Section 246A provides an appellate remedy for reassessment disputes, making the writ petition premature. The Court, after reviewing submissions and case records, agreed that the petitioner should pursue the statutory appellate route instead. It granted 30 days to file an appeal before the Commissioner of Income Tax (Appeals), who must dispose of the case within three months. With this direction, the writ petition was dismissed, and all connected petitions were closed. No costs were imposed.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

This Writ Petition is disposed of without expressing any opinion on merits of the case by granting a liberty to the petitioner to file statutory appeal before the Appellate Commissioner in terms of Section 246A(1)(d) of the Income Tax Act, 1961.

2. The brief facts of the case are that the petitioner is an individual taxpayer (PAN No. EWVPS4138G) and Manager of M/s. PAL FIN Marketing Associates, a loan recovery agent for HDFC Bank. The Petitioner oversees administrative and operational functions, while her spouse handles recovery activities. A notice under Section 148 of the Income Tax Act, 1961 was issued on 25.03.2024 for AY 2020-21 based on information under Section 135A, indicating income had escaped assessment. The notice was approved by the Principal Commissioner of Income Tax, Madurai (PCIT) on 23.03.2024. The petitioner submitted a detailed reply on 11.11.2024, with all supporting documents demonstrating the income was properly accounted for. However, the same was not considered and the non-consideration of the evidence, which according to the petitioner is in violation of the principles of natural justice.

3. Per contra, the learned counsel for the respondents 1 and 2 submitted that the provisions of Section 246A of the Income Tax Act clearly outline that any person aggrieved by an order of reassessment or faceless assessment under Section 147 read with Section 144B has the right to file an appeal before the Commissioner (Appeals). The writ petition is premature and all grounds raised before this Court shall be raised before the appellate tribunal.

4. Heard the learned counsel for the parties and perused the materials available on record.

5. After careful consideration of the submissions made by both parties, it is clear that the petitioner has an alternate remedy before the Appellate Commissioner. Considering the same, liberty is given to the petitioner to challenge the impugned order on merits and in accordance with law within the period of 30 days from the date of receipt of a copy of this order. If any such an appeal is filed by the petitioner before the Appellate Commissioner within such time, under Section 246A(1)(d) of the Income Tax Act, 1961, the Appellate Commissioner shall consider and dispose of the same, on merits in accordance with law, within three months thereafter. No costs. Consequently, connected miscellaneous petitions are closed.