Case Law Details
Praveen Sanjiv Vs ITO (Madras High Court)
In the case of Praveen Sanjiv vs. ITO, the Madras High Court addressed a challenge to an assessment order for the assessment year 2015-16 on grounds of breach of principles of natural justice. Here’s a detailed summary of the case:
The petitioner, Praveen Sanjiv, challenged an assessment order issued on 26.03.2024, which reopened his assessment under Section 148A(b) of the Income-tax Act, 1961. The proceedings were initiated based on allegations regarding two purchases of immovable property. The petitioner admitted to one transaction and provided relevant documents in response to notices received over time.
The sequence of events leading to the challenged assessment order is as follows:
Reopening and Notices: The assessment was reopened with a notice under Section 148, along with a draft assessment order issued on 12.03.2024. The petitioner responded to this with a detailed reply on 14.03.2024, attaching several documents, including income tax acknowledgments of his parents and documents related to the relevant property transactions.
Issue of Extractable Documents: The respondent (ITO) subsequently notified the petitioner on 15.03.2024 that the documents attached to his reply were not in a readable format. The petitioner contended that the attachments were in readable PDF format and were accessible to him.
Impugned Assessment Order: Despite the petitioner’s submission of documents, the impugned assessment order dated 26.03.2024 was issued without considering the attachments to his reply. The order cited non-extractability of the attachments as the reason for not considering the petitioner’s response.
Legal Arguments: The petitioner, through his counsel, argued before the Madras High Court that he had complied with all procedural requirements and submitted all relevant documents in readable format. He contended that the failure of the tax authority to consider his submissions and attachments violated principles of natural justice.
Court’s Decision: The Madras High Court, after hearing both parties, concluded that the impugned assessment order was unsustainable due to the non-consideration of the petitioner’s reply and attachments. The court emphasized that principles of natural justice require that parties be heard and their submissions be considered before adverse orders are passed.
Remedy Granted: Consequently, the court set aside the assessment order dated 26.03.2024 and remanded the matter back to the tax authority for reconsideration. The court directed the respondents to facilitate the petitioner in uploading his reply along with relevant attachments on the portal within two weeks. It further instructed the tax authority to provide the petitioner with a reasonable opportunity, including a personal hearing via video conference, and to issue a fresh assessment order within three months from the receipt of the petitioner’s reply.
The court observed that the tax authorities had failed to ensure the documents were in a readable format, despite multiple submissions by the petitioner. The court also noted that the tax authorities did not examine the attachments, which was a critical oversight. Consequently, the court ruled that the non-consideration of the petitioner’s response and the attached documents violated natural justice principles, rendering the reassessment order unsustainable.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An assessment order for assessment year 2015-16 is challenged in this writ petition on the ground of breach of principles of natural justice.
2. By issuing an order dated 01.04.2022 under Section 148A(b) of the Income-tax Act, 1961, the assessment of the petitioner was reopened. A notice under Section 148 was issued contemporaneously. Such notice was replied to. Thereafter, a draft assessment order came to be issued along with the show cause notice dated 12.03.2024. The petitioner replied thereto on 14.03.2024 by attaching several documents. By notice dated 15.03.2024, the second respondent informed the petitioner that the documents attached with the petitioner’s reply of 14.03.2024 were not in readable form. The impugned assessment order came to be issued in the above facts and circumstances on 26.03.2024.
3. Learned counsel for the petitioner submitted that proceedings were initiated against the petitioner in respect of two alleged purchases of immovable property. In response, the petitioner admitted that there was one transaction and provided documents in relation thereto in response to the notices received over a period of time. With specific reference to the reply dated 14.03.2024 to the show cause notice cum draft assessment order, learned counsel pointed out that all relevant information, including information relating to the income-tax returns of the petitioner’s parents, was attached thereto. He also pointed out that a grievance was raised by the petitioner that the petitioner was able to open and read the attached documents, which are in readable PDF. By referring to the impugned assessment order, learned counsel points out that the proposed variations were confirmed without examining the attachments to the petitioner’s reply dated 14.03.2024. Hence, he submits that interference with the impugned order is called for.
4. Prabhu Mukunth Arunkumar, learned junior standing counsel accepts notice for the respondents.
5. Learned counsel points out that the petitioner was provided multiple opportunities to provide an explanation with regard to the transaction forming the basis for the assessment proceedings and that the petitioner failed to provide the documents in readable form.
6. The petitioner has placed on record the reply dated 14.03.2024 to show cause notice cum draft assessment order dated 12.03.2024. The list of attachments thereto include the I.T. acknowledgment of the petitioner’s mother and father, documents pertaining to sources of income and bank statements. The petitioner had previously enclosed all documents pertaining to the purchase of the relevant immovable property and the construction undertaken thereon. In the impugned order, in relevant part, it is recorded as under:
“The above show-case was delivered to the assess on-line to the mail: [email protected]. On 14.03.2024, the assessee sent reply through e-proceedings (on-line), but the same were not extractable. Hence, a letter dt 15.03.2024 was sent to the assessee to re-submit the documents in extractable mode. However, the assessee could not furnish the required documents as called for in the notice issued, in extractable mode.
Since the assessee was not able to send his reply through on-line in extractable mode of attachments, as has been done by him in the previous reply, the reply made in response to show cause notice was not taken into consideration, as not extractable.”
7. In effect, on the basis that the petitioner’s reply and documents attached thereto could not be extracted and examined, the order was issued. In the factual context of the petitioner having submitted a reply along with relevant documents, the non-consideration thereof violates principles of natural justice. Hence, the impugned assessment order is unsustainable.
8. Therefore, the impugned assessment order dated 26.03.2024 is set aside and the matter is remanded for reconsideration from the stage of reply to the show cause notice cum draft assessment order.
The respondents are directed to take necessary measures to enable the petitioner to upload the reply on the portal along with the relevant attachments. The petitioner is directed to upload the reply within two weeks from the date of receipt of a copy of this order. Upon receipt thereof, the second respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing through video conference, and thereafter issue a fresh order within three months from the date of receipt of the petitioner’s reply.
9. W.P.No.12151 of 2024 is disposed of on the above terms without any order as to costs. Consequently, the connected miscellaneous petitions are closed.
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