PERSONAL TAX: I-T notice must be given to taxpayer

A taxpayer had filed his return of income, which was processed by the tax officer under the ordinary procedure. After some time, the tax officer received some additional information on the taxpayer basis the Annual Information Returns filed by various institutions/companies as required under the Income Tax Ac ('the Act').

In view of this, the tax officer initiated reassessment proceedings against the taxpayer and issued notice u/s 148 of the Act. On given dates as per the notice, when the tax officer did not receive any response from the taxpayer, he framed the assessment ex-parte and assessed the additional income at Rs 37,45,000.

At the first level of appeal, when the first date of hearing was fixed on March 14, 2018, the taxpayer sought an adjournment and was informed that the next date of hearing would be informed via a fresh notice. Further, the taxpayer never received any notice fixing the date of hearing for March 27, 2018. Under the relevant provisions of the Act, it is essential to fix a date and place of hearing of the appeal by giving notice to the taxpayer or his authorised representative.

In the absence of appearance by the taxpayer nor a request for fresh adjournment having been received on March 27, 2018; the appellate authority confirmed the order by the tax officer.

Before the tax tribunal, the taxpayer argued that in the first place, he was never in receipt of the initial notice dated March 28, 2017 issued u/s 148 of the Act. The taxpayer submitted a copy of the said notice issued by the tax officer and highlighted that the said notice was issued to the taxpayer at a wrong address. The subsequent notice dated August 3, 2017 was also issued at the wrong address. The taxpayer submitted that since both these notices were never received by him; it is not justified on the part of the tax officer to pass the ex-parte order. He further contended before the tribunal that the reassessment proceedings were initiated simply on the basis of the AIR without making necessary enquiries and also pointed out that the addition made by the tax officer on account of non-explanation on source of investment for purchase of property worth Rs 37,45,000; which were through account payee cheques/ drafts and the source was not at all doubted.

On the basis of the facts of the case, the tribunal observed that the notices issued by the tax officer were directed to the address which was different than the address on which the ex-parte assessment order was framed. The tribunal thus found force in the taxpayer's submissions that the notices u/s 148 and the subsequent ones were issued at a wrong address, which was a plot that the taxpayer claimed to be under construction at that point in time. The tribunal also observed that the first appellate authority also confirmed the tax officer's order without bringing any material on record that the notice for hearing was indeed served upon the taxpayer.

Keeping in view the principles of natural justice, the Delhi Tribunal deemed it appropriate to remand the case back to the tax officer to ascertain the facts after providing due and reasonable opportunity of being heard to the taxpayer. Thus, the appeal was allowed in favour of the taxpayer.

The writer is a Sebi-registered investment adviser