Case Law Details
Dilpreet Singh Chhabra Vs ITO (Orissa High Court)
The petitioner-assessee sought re-adjudication of the assessment order due to a medical situation in the family that prevented timely response to the show cause notice.
The case revolves around a show cause notice issued under section 148-A of the Income Tax Act, 1961, based on information from the INSIGHT portal. The petitioner claimed that a medical situation in the family, supported by a medical certificate, hindered their response to the notice. However, the revenue contended that despite opportunities, the assessee did not respond, justifying the assessment made.
The High Court analyzed the show cause notice and found no issues with its validity. It observed that the notice properly relied on information obtained from the INSIGHT portal, and the AO detected income escapement. Nevertheless, the High Court considered the petitioner’s medical situation and set aside the assessment order on grounds of equity.
The case of Dilpreet Singh Chhabra Vs ITO highlights the importance of considering genuine reasons for non-response in tax proceedings. The High Court’s decision to direct re-adjudication due to the medical situation in the family demonstrates the court’s concern for fairness in tax assessments.
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
1. Mr. Ray, learned senior advocate appears on behalf of petitioner- assessee. He submits, show cause notice dated 7th March, 2022 under clause (b) in section 148-A of Income Tax Act, 1961 was parroting of the information portal in INSIGHT, Case Related Information Upload (CRIU). At that time there was a medical situation in petitioner’s family borne out by medical certificate dated 25th April, 2022, preventing his client from replying to the show cause notice and further to participate in the proceeding following, resulting in impugned assessment order dated 14th March, 2023.
2. Without prejudice to above he submits, where the information reied on was consideration at Rs.52,89,500/-, short term capital gain was added back at Rs.75,23,068/-. Furthermore, penalty proceeding under section 270-A was initiated.
3. He relies on judgment of the Supreme Court in Union of India v. Ashish Agarwal reported in (2023) 1 SCC 617, paragraph-25.1 to submit, no information on material relied upon was furnished in the show cause notice. He then relies on view taken by coordinate Bench on order dated 3rd January, 2022 in P.(C) no.16139 of 2016 (Sri Laxmi Narayan Agency v. The I.T.O.), paragraph-9. A passage from the paragraph is reproduced below.
“9. Further, it is seen that the reasons for reopening of the assessment merely repeals the language of the report of the DDIT (Inv.) without an independent application of mind by the A.O. In Sabh Infrastructure Ltd. v. Asst. Commissioner of Income Tax [2017] 398 ITR 198 (Delhi), the Delhi High Court in similar circumstances set aside the re-assessment order. In paragraph-15 of the said decision, it has been observed that assessment proceedings, especially those under Section 143(3) of the Act “have to be accorded sanctity and any reopening of the same has to be on a strong and sound legal basis.” It was further emphasized that “there have to be reasons to believe and not merely reasons to suspect that income has escaped assessment. xxx xxx xxx.”
4. Mohapatra, learned advocate, Senior Standing Counsel appears on behalf of revenue. He submits, inspite of show cause notice issued and all opportunities given, assessee did not respond. In the circumstances, on available records there was assessment made. No interference is warranted. The writ petition be dismissed.
5. We find the show cause notice was duly issued. It cannot therefore be the deemed notice under paragraph-25.1 in Ashish Agarwal (supra). Having said so, it appears from the show cause notice that it relied on information obtained from the INSIGHT portal under CRIU. The information was, petitioner had sold immovable property of Rs.52,89,500/- during financial year 2017-18 relevant to assessment year 2018-19. This consideration was not reflected in the return filed. In the circumstances petitioner was required to show cause, which he did not.
6. We do not find any ‘parroting’ or ‘paraphrasing’ in the show cause notice. On the Assessing Officer (AO) coming across the information and comparing it with the return filed by the assessee, the authority detected there was escapement of assessment of income. In the circumstances, the notice appears to be a good one.
7. We find from the assessment order, also impugned, no relief under section 48, providing for mode of computation, was given to the assessee. The assessment order says that the assessee did not supply relevant documents, inspite of notice. Considering that appellant had a medical situation in the family, borne out by the contemporaneous certificate, we interfere on grounds of equity and set aside only impugned assessment order.
8. Petitioner will file revised returned by 7th August, 2023. There shall be no extension sought for or granted for the filing of it. Omission by petitioner to file the revised return will automatically restore impugned assessment order. In event the return is filed, upon reassessment there shall be accordingly revisiting of direction for initiation of penalty proceeding.
9. The writ petition is disposed of.
