By TIOL News Service

MADRAS, MAR 07, 2018: THE ISSUE BEFORE THE SINGLE BENCH IS - Whether principle of natural justice will come to aid of assessee, after repeated failure to respond to reopening notices & summons issued by Department. NO IS THE VERDICT.

Facts of the case:

The Assessee, an individual, had filed her return declaring a total income of Rs.10,94,980/- and net agricultural income of Rs.1,60,00,000/-. Such returned income was processed and accepted by the Department. However, subsequently, the ITO being of the opinion that income chargeable to tax had escaped assessment, called the assessee and issued notices u/s 142(1) r/w/s 129 requiring certain details to be furnished. The Assessee however sought time to file the required documents in view of change of Auditor and non-availability of back papers. After some time, the AR of assessee filed the return, bank statements and copy of agricultural land documents for the A.Y 2013-14, though, the ITO issued summons directing the assessee to produce the Books of Accounts. In response, the assessee expressed her inability to appear, by enclosing a Medical Certificate that she was suffering from Ostereo Arthritis and undergoing treatment. Accordingly, the ITO issued a show cause u/s 271(1)(b) calling upon the assessee to explain as to why penalty should not be levied for the failure on her part to appear. In the meanwhile, the assessee's request for providing the reasons recorded for reopening, was also refused by ITO. Ultimately, the ITO issued a show cause notice as to the completion of assessment u/s 144 r/w/s 147.

High Court held that,

++ it is seen that assessee has filed the return for A.Y 2013-14 belatedly and no scrutiny assessment u/s 143(3) was made. According to the ITO, as per the Annual Information Return received from the Bank and Sub Registrar's Office, the assessee had deposited cash of Rs.23.54 lakhs and had purchased immovable properties for Rs.33 lakhs. The return filed by assessee also reflected the receipt of agricultural income of Rs.1.6 crores. In these circumstances, the ITO initiated reassessment proceedings by issuing notice u/s 148, which is within four years from the end of the A.Y. It is also seen that the assessee was given several opportunities to produce the records, but in vain. Rather, after repeated summons and notices, the assessee ha informed that she was taking medical treatment and will not be able to appear in person and sought condonation of non-appearance. Taking into consideration the age and health condition of assessee, another summons were issued calling upon the Assessee's AR to furnish the details, and even on that day, there was no response. Accordingly, the ITO had to pass the reassessment order and despatch the same to the assessee. It is therefore clear that the ITO had given sufficient opportunities, but the assessee had failed to utilize those and produce the documents. Therefore, the contention regarding hearing opportunity, cannot be accepted;

++ it is further seen that, though the assessee has sought for the reasons for reopening, the AO has not furnished the same to assessee. In fact, the assessee had stated that her letter requesting the reasons recorded for reopening the assessment itself was refused, therefore, the assessee sent the letter by Speed Post and E-mail to the ITO. Inspite of the same, the ITO had not furnished the reasons recorded for reopening. Therefore, only on this ground, following the dictum laid down by Supreme Court in GKM Drivershafts (India) Ltd. Vs. ITO - 2002-TIOL-634-SC-IT, the impugned assessment order is liable to be set aside.

(See 2018-TIOL-393-HC-MAD-IT)