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Case Law Details

Case Name : Synthite Industries Private Limited Vs ACIT (Kerala High Court)
Appeal Number : WP(C) No. 5229 of 2024
Date of Judgement/Order : 09/02/2024
Related Assessment Year :

Synthite Industries Private Limited Vs ACIT (Kerala High Court)

The case of Synthite Industries Private Limited vs ACIT before the Kerala High Court revolves around the issuance of notices under Section 142(1) of the Income Tax Act. After a previous assessment order was set aside, the petitioner challenged the validity of subsequent notices seeking explanations on additional issues.

Detailed Analysis: Following the quashing of the initial assessment order and a remand for a reevaluation process, the Assessing Authority issued notices (Exts.P9 and P11) to the petitioner under Section 142(1) of the Income Tax Act. The petitioner argued that these notices were beyond the scope of the remand and lacked jurisdiction.

However, the court found no merit in the petitioner’s argument. It clarified that there is no legal prohibition against the Assessing Authority issuing multiple notices. Since the court’s directive was to re-do the assessment process, the authority was entitled to seek explanations on any additional income or issues not previously addressed.

The court emphasized that if the Assessing Authority possesses information regarding unexplained income or other matters, it has the right to request explanations, even if they were not part of the original show cause notice. Therefore, the notices issued by the authority were deemed to be within its jurisdiction.

Conclusion: The Kerala High Court’s decision reinforces the authority of the Assessing Authority to issue multiple notices under the Income Tax Act. By dismissing the petitioner’s challenge, the court upholds the principle that the authority can seek explanations on various issues, especially after a previous assessment order has been set aside and a re-evaluation process initiated. This ruling highlights the flexibility and discretion afforded to tax authorities in conducting assessments and ensures that taxpayers fulfill their obligations under the law.

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

This is the second round of litigation by the petitioner before this Court. Earlier, the petitioner had approached this Court by filing WP(C) No.12756/2022 against the assessment order passed under Section 143(3) read with Sections 263 and 144B of the Income Tax Act, 1961 (‘Act’, for short) in Ext.P7 dated 25.3.2022 in respect of the assessment year 2016-17, on the ground that the petitioner was not afforded meaningful and sufficient opportunity to respond to the show cause notice. This Court considering the submissions of the learned counsel for the petitioner, vide judgment dated 10.2.2023, Ext.P8, allowed WP(C) No.12756/2022 and quashed the said assessment order with direction to the authority concerned to re-do the process in accordance with the procedure laid down by law, after permitting the petitioner to show cause in a meaningful manner.

2. Now, the petitioner has approached this Court with this writ petition against Exts.P9 and P11 notices issued under Section 142(1) of the Act calling upon the petitioner to give explanation with regard to other issues. Learned counsel for the petitioner submits that once the assessment order was set aside and the matter was remanded back, the assessing authority could not have demanded explanation in respect of other aspects, which may not be part of the earlier show cause He further submits that since the matter was only remanded back to consider the issues, which were sought to be clarified by issuing notice under Section 142(1), a subsequent notice asking for other details is totally without jurisdiction.

3. I find no substance in the submission.

There is no bar for the assessing authority to issue more than one notice. This Court has directed for re-doing the process and if the authority has information and materiel regarding other unexplained income of the petitioner, the assessing authority is well within the power to ask for explanation in respect of those income and it cannot be said that the notices impugned are without jurisdiction.

In view of the above, I find no substance in the present writ petition, which is hereby dismissed. Pending interlocutory application, if any, in the present writ petition stands dismissed.

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