Shankar Reddy Battala Hanumappa vs Assessment Unit Income Tax Department, Rep By Additional / Joint / Deputy / Assistant Commissioner Of Income Tax / Income Tax Officer, Income Tax Department, Ministry Of Finance, Room No.401, 2nd Floor, E-Ramp, Jawaharlal Nehru Stadium Delhi-110003 & Others

B M Shyam Prasad, J

The petitioner’s primary grievance is with the second respondent’s order dated 31.03.2022 under Section 148A[d] of the Income Tax Act, 1961 [for short, ‘the IT Act’] [Annexure-B2], the consequential assessment order dated 28.03.2023 [Annexure-A1] and the computation and demand/penalty notices. The petitioner contends that, though reply with documents is filed upon receipt of notice under Section 148A(b) of the IT Act, the impugned order dated 31.03.2022 is passed primarily on the ground that the petitioner has not furnished the reply. Sri S Annamalai, the learned counsel for the petitioner, and Sri M Dilip, the learned counsel for the respondent are heard for final disposal in the light of the afore.

The undisputed facts are that the Notice under Section 148A[b] of the IT Act is issued to the petitioner on 15.03.2022 allowing time till 23.03.2022 to file reply, if any. The petitioner has not filed his reply, or documents, on or before 23.03.2022 but has filed such reply with the documents on 30.03.2022. The second respondent has concluded the proceedings under Section 148A[d] of the IT Act by the impugned order dated 31.03.2022 recording as follows:

“The assessee was required to furnish reply on or before 23.03.2022. In response to notice, no reply has been furnished by the assessee till date. Thus, it is logical to conclude that the assessee has no proper explanation with respect to the above-mentioned escapement of income in his case for AY 2015-16.”

Sri M Dilip submits that the petitioner, who has not filed response within the time allowed in the notice under Section 148A[b] of the IT Act, cannot complain of want of opportunity. However, this contention must necessarily be examined in the light of the provisions of Section 148A[c] (Section 148A(c): consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause [b].) of the IT Act which stipulate that the Assessing Officer shall consider the reply furnished, if any, in response to the notice under Section 148A[b] of the IT Act without the additional stipulation that the reply must be filed within the time allowed in the notice. The petitioner undoubtedly has filed his reply before the order dated 31.03.2023, and the second respondent has completed the proceedings observing that no reply is filed until the date of the order, which is factually incorrect.

If the provisions of Section 148A of the IT Act do not stipulate that the reply must be filed within the time allowed in the notice under Section 148A[b] of the IT Act but the response is filed before the date of order under Section 148A (C), the second respondent should have been considered. Crucially, in the present case, the observation is that the Assessee has not filed any reply at all. Therefore, this Court must intervene and allow the petition on this limited ground directing the second respondent to consider the reply and pass proceedings afresh under Section 148A(d) of the IT Act with the Department being entitled to all consequential extension in the limitation. Therefore the following:

ORDER

[a] The petition is allowed in part, and the second respondent’s order dated 31.03.2022 [Annexure-B2] under Section 148A(d) of the IT Act, the Notice dated 31.03.2022 under Section 148 of the IT Act [Annexure-B3] as also the Assessment Order dated 28.03.2023 [Annexure-A1] and all the impugned consequential demands/penalty notices are quashed.

[b] The petitioner, subject to all just exceptions in law, is reserved liberty to file additional reply/ documents, if any, within a period of two weeks from today.