The Gujarat High Court allowed the petitions praying to set aside the assessment order dated passed by the Assessing Officer under Section 153C read with Section 144 of the Income Tax Act, 1961, and the orders passed under Section 271(1)(c) of the Income Tax Act, 1961 whereby the penalty came to be imposed on the petitioners. The Court observed that the orders are liable to be set aside on the said ground of not giving of opportunity and resultant breach of principles of natural justice.

Brief Facts:

The petitioner had been regularly assessed to tax by the Income Tax Office, Rajkot for the assessment year 2013-14, to which the said petition relates. The petitioner had filed a return of income. On 29.09.2021, the respondent Assessing Officer passed an assessment order under section 153C read with Section 144 of the Act. Thereafter, orders dated 06.01.2022 and 09.02.2022 under section 271(1)(c) of the Act were passed levying penalty for the year under consideration.

The assessment order as well as orders of penalty were never served upon the Petitioner. It was stated that on 25.03.2022, the petitioner received an email communication from the income tax authorities with a demand for the assessment year 2021-22 raised. The petitioner averred that when he opened the portal to check the demand for the said assessment year 2021-22, he came to know that the assessment order under section 153C read with section 144 of the Act as well as penalty orders, as above were passed in respect of the assessment year 2013-14 and other assessment years.

Contentions of the Petitioner:

The Learned Counsel for the Petitioner submitted that the assessment orders under section 153C read with section 144 of the Act in respect of different assessment years as above came to be passed straightway without serving any notice to the petitioner. It was submitted that the petitioner had no opportunity to meet with the case of the department. He argued that there was an open breach of natural justice.

Observations of the Court

The Court observed that as section 144B (6)(ii) of the Act contemplates, every notice or order or any other electronic communication shall be delivered to the addressee being the assessee by way of placing an authenticated copy in the registered account of the assessee or by sending an authenticated copy or by uploading the authenticated copy on the mobile app of the assessee.

Further, the Court remarked that when the assessment under section 153 read with section 144 of the Act have been done by the assessing officer without giving the petitioner assessee an opportunity of being heard in terms of and within the meaning of section 144 of the Act, the orders are liable to be set aside on the said ground of not giving of opportunity and resultant breach of principles of natural justice.

The decision of the Court:

The Gujarat High Court, allowing the petitions, held that the Assessing Officer shall undertake the exercise afresh of giving the opportunity of hearing to the petitioner assessee in respect of each case as contemplated under section 144 of the Act and shall complete the assessment proceedings right from the stage of issuing notice within three months from the date of receipt of this order.

Case Title: Manishkumar Tulsidas Kaneriya vs Assistant Commissioner Of Income Tax, Central 1, Rajkot

Coram: Hon’ble Justice N. V. Anjaria and Hon’ble Justice Niral R. Mehta

Case no.: R/SPECIAL CIVIL APPLICATION NO. 7614 of 2022

Advocate for the Petitioner: Mr. Darshan R Patel

Advocate for the Respondent: Mr. Varun K. Patel

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