Case Law Details
Ramrati Vs ITO (Delhi High Court)
Introduction: In a recent judgment, the Delhi High Court quashed an Income Tax order passed under Section 148A(d) of the Income Tax Act, 1961. The court’s decision was based on the non-consideration of the petitioner’s reply in the assessment for Assessment Year (AY) 2016-17. This article delves into the details of the case and its implications.
Detailed Analysis
1. Background of the Case The case pertains to an order dated 25.03.2023 passed under Section 148A(d) of the Income Tax Act and the consequent notice issued under Section 148 of the Act for AY 2016-17. The order and notice were challenged by the petitioner.
2. Allegations by the Revenue The revenue alleged that the petitioner had sold a property and received consideration for the sale, which she had not disclosed. The claimed consideration amount was Rs. 1,52,50,000.
3. Response Filing Deadline The petitioner was directed to file a response by 06.03.2023. She sought an extension and was granted time until 15.03.2023 to file her reply.
4. Discrepancy in AO’s Observation The petitioner claimed that she uploaded her reply on the designated portal on 15.03.2023. However, the Assessing Officer (AO) proceeded with the case under the assumption that no response was filed. The AO’s observation contradicted the petitioner’s claim.
5. Violation of Natural Justice The court, after considering the petitioner’s submission and the contradiction in the AO’s observation, concluded that the principles of natural justice were violated. The failure to consider the petitioner’s reply was a significant issue.
6. Court’s Decision The Delhi High Court set aside the impugned order and notice, allowing the Assessing Officer to pass a fresh order. The AO was instructed to consider the reply filed by the petitioner and provide her with a personal hearing. The court did not express any opinion on the merits of the case, leaving it to the AO to decide based on the reply and submissions made by the petitioner.
Conclusion: The Delhi High Court’s decision in the case of Ramrati Vs. ITO highlights the importance of adhering to the principles of natural justice in tax assessments. The failure to consider the petitioner’s reply led to the quashing of the Income Tax order, emphasizing the need for a fair and just assessment process. This case serves as a reminder of the significance of due process in taxation matters.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
CM APPL. 48825/2023
1. Allowed, subject to just exceptions.
W.P.(C) 12368/2023 & CM Appl. 48824/2023 [Application filed on behalf of the petitioner seeking interim relief]
2. Issue notice.
2.1 Mr Vipul Agrawal, learned senior standing counsel, accepts notice on behalf of the respondents/revenue.
3. Given the directions that we intend to pass, Mr Agrawal says that he does not wish to file a counter-affidavit in the matter, and he will argue the case based on the record presently available with the court.
4. Via this writ petition, the petitioner seeks to challenge the order dated 25.03.2023 passed under Section 148A(d) of the Income Tax Act, 1961 [in short, “Act”] and consequent notice of even date, i.e, 25.03.2023, issued under Section 148 of the Act.
5. The impugned order and notice concern Assessment Year (AY) 2016-17.
6. A perusal of the notice dated 24.02.2023 issued under Section 148A(b) of the Act discloses that the allegations made qua the petitioner is that she sold the subject property and received consideration against the sale, which was not disclosed.
7. According to the respondents/revenue, the consideration received by the petitioner was Rs.1,52,50,000/-.
8. The aforementioned notice also discloses that this information was obtained by the respondent/revenue via the Non Filing Monitoring (NMS).
9. Based on this allegation, the petitioner was directed to file a reply on or before 06.03.2023. It appears that the petitioner sought accommodation via a request made on 06.03.2023 and accordingly, she was granted further time to file a response, albeit, by 15.03.2023.
10. The petitioner claims that a reply dated 14.03.2023 was uploaded on the designated portal on 15.03.2023. Although the petitioner has failed to place on record any material to back its claims, Mr Agrawal says that he has obtained instructions that the reply of the petitioner was available on the designated portal, on the date set forth hereinabove.
11. A perusal of the impugned order dated 24.03.2023 passed under Section 148A(d) of the Act shows that the Assessing Officer (AO) has proceeded on the basis that no response was filed by the petitioner, which according to the instruction received by Mr Agrawal, is not correct.
12. Therefore, in our opinion, the principles of natural justice have been violated as submitted by Ms Shurbhi Chandra, advocate, who appears on behalf of the petitioner.
13. Thus, according to us, the best way forward would be to set aside the impugned order and notice.
14. It is ordered accordingly.
15. Liberty is, however, given to the AO to pass a fresh order, after taking into account the reply filed by the petitioner. Furthermore, the AO will also accord a personal hearing to the petitioner and/or her authorised representative. For this purpose, the AO will issue a notice to the petitioner.
16. As is evident, we have not expressed any opinion on the merits of the case; the AO will be free to decide the matter on merits, having regard to the reply and submissions made in support of the petitioner’s case.
17. The writ petition is disposed of, in the aforesaid terms.
17.1 Consequently, pending application shall stand closed.
18. Parties will act based on the digitally signed copy of the order.
