Case Note & Summary
The petitioner, Madhuri Sameer Gokhale, an individual homemaker, challenged the reassessment order dated 29 March 2022 passed by the National Faceless Assessment Centre (NFAC) under Section 147 read with Sections 144 and 144B of the Income Tax Act, 1961, for Assessment Year 2014-15, along with the consequential demand notice dated 30 March 2022. The Assessing Officer had issued a notice under Section 148 on 23 March 2021, alleging that income of approximately Rs. 11.61 crores had escaped assessment. The petitioner filed her return of income on 29 April 2021. Subsequently, the Assessing Officer issued notices under Section 142(1) on 28 December 2021 and 8 January 2022, seeking details of the transactions. The petitioner requested an adjournment on 14 January 2022 due to COVID-19 difficulties and her chartered accountant's surgery, but no formal order was passed on the request. On 16 March 2022, a show cause notice-cum-draft assessment order was issued under Section 144, proposing a best judgment assessment. The petitioner filed a detailed reply on 24 March 2022, explaining that the amounts were receipts from a family trust and HUF on which tax had already been paid, and provided supporting documents. Despite this, the Assessing Officer passed the impugned assessment order on 29 March 2022, making a best judgment assessment without considering the petitioner's reply and without granting a personal hearing. The petitioner argued that the procedure under Section 144B, which mandates providing an opportunity to the assessee including a personal hearing, was not followed, rendering the order a nullity. The respondents contended that the procedure was followed and that the petitioner had not complied with earlier notices. The court analyzed the provisions of Section 144B, particularly clauses (xiv) and (xvi), which require the Assessing Officer to provide a show cause notice and an opportunity of being heard, including a personal hearing if requested. The court found that the petitioner's reply dated 24 March 2022 was not considered, and no personal hearing was granted despite the petitioner's request for adjournment indicating a desire to be heard. The court held that the mandatory procedure under Section 144B was violated, and the assessment order was passed in gross violation of natural justice. Consequently, the court quashed the impugned assessment order and demand notice, allowing the writ petitions with no order as to costs.
Headnote
A) Constitutional Law - Writ Jurisdiction - Article 226 of the Constitution of India - Challenge to Assessment Order - The petitioner sought a writ of certiorari to quash the reassessment order and demand notice on grounds of violation of natural justice and mandatory procedure under Section 144B of the IT Act. (Paras 3, 4) B) Income Tax - Reassessment - Section 147 of the Income Tax Act, 1961 - Reopening of Assessment - The Assessing Officer issued notice under Section 148 for AY 2014-15 on grounds that income had escaped assessment. The petitioner filed a return and provided explanations, but the Assessing Officer passed a best judgment assessment without considering the reply and without granting a personal hearing. (Paras 7-15) C) Income Tax - Assessment Procedure - Section 144B of the Income Tax Act, 1961 - Mandatory Procedure - The court held that the procedure under Section 144B, including the requirement to provide a personal hearing under clause (xvi) and to consider the assessee's reply, is mandatory. Failure to comply renders the assessment order a nullity. (Paras 17-20, 22-24) D) Income Tax - Best Judgment Assessment - Section 144 of the Income Tax Act, 1961 - Opportunity of Hearing - The court held that even in a best judgment assessment, the Assessing Officer must provide a meaningful opportunity to the assessee, including a personal hearing if requested, and must consider the assessee's submissions. The impugned order was passed in violation of natural justice. (Paras 21, 25-27) E) Income Tax - Reassessment - First Proviso to Section 147 of the Income Tax Act, 1961 - Time Limit - The court noted that the reassessment was initiated within the time limit, but the procedural violations rendered the order invalid. (Para 4)
Issue of Consideration
Whether the impugned assessment order dated 29 March 2022 passed under Section 147 read with Section 144 and 144B of the Income Tax Act, 1961, is illegal and without jurisdiction for non-compliance with the mandatory procedure under Section 144B, particularly the requirement of providing a personal hearing and proper opportunity to the assessee.
Final Decision
The court allowed the writ petitions, quashing and setting aside the impugned assessment order dated 29 March 2022 and the consequential demand notice dated 30 March 2022. No order as to costs.
Law Points
- Natural justice
- mandatory procedure under Section 144B
- best judgment assessment
- reassessment under Section 147
- violation of principles of natural justice
- nullity of assessment order
