Reopening of assessment and imposition of penalty set aside as AO failed to satisfy HC direction

Sahebrao Deshmukh Co-op. Bank Ltd. Vs ACIT (Bombay High Court)

Bombay High Court held that AO failed to satisfy the direction given by the court while issuing notice under section 148 of the Income Tax Act. Accordingly, order for reopening of assessment and demanding penalty u/s 271(1)(c) are quashed and set aside.

Facts-

This is a writ petition invoking this Court’s power under Article 226 of the Constitution of India to challenge order dated 31.03.2021, passed under Section 148 of the Income Tax Act, 1961, and further challenge to order dated 22.03.2022, rejecting the Petitioner’s objections to reopening of the assessment, Assessment Order dated 31.03.2022, passed u/s. 147 read with Section 143(3) of the Act, Notice of Demand dated 31.03.2022, issued u/s. 156 of the Act, and Penalty Notice dated 31.03.2022, issued under Section 271(1) (c) of the Act, issued by Respondent No.2.

Petitioner submitted that AO has in complete violence of the directions of this Court given in the case of Tata Capital Financial Services Limited, without furnishing a copy of the documents forming the basis of which, the reopening was ordered nor giving a clear notice of hearing of the matter, has acted in contravention of the principles of natural justice, and consequently in breach of the Article 14 of the Constitution of India.

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