Reassessment Beyond 4 Years: Reassessment under Section 147 of the IT Act cannot be initiated beyond the 4-year period unless there is evidence of failure to disclose material facts by the assessee. (Para 37)

Faceless Assessment Procedure: The mandatory procedure under Section 144B of the IT Act, including the issuance of a show-cause notice and granting reasonable time to respond, must be strictly followed. (Paras 30-34)

Natural Justice: The principles of natural justice, including the right to a reasonable opportunity to respond, are inherent in the faceless assessment procedure under Section 144B of the IT Act. (Paras 33-36)

Alternative Remedy: The availability of an alternative remedy does not bar the exercise of writ jurisdiction when there is a violation of mandatory procedures and principles of natural justice. (Paras 38-40)

The High Court quashed the impugned assessment order and demand notice, holding that the reassessment was initiated in violation of the first proviso to Section 147 of the IT Act. The Court found that the faceless assessment procedure under Section 144B was not followed, and the petitioner was not given a reasonable opportunity to respond, violating the principles of natural justice. The Court emphasized that the reassessment was based on income already taxed in earlier years, and no fresh tangible material was provided to justify the reopening.

Major Acts:

1. Constitution of India (COI), Article 226 – Writ jurisdiction invoked for quashing assessment order.

2. Income Tax Act, 1961 (IT Act) – Sections 144B, 147, 144, 143(2), 142(1), 148, 156, 271(1)(b), 271F – Reassessment, faceless assessment, best judgment assessment, penalty proceedings.

Subjects:
Reassessment, Faceless Assessment, Natural Justice, Section 144B, Section 147, Best Judgment Assessment, Audi Alteram Partem, Writ Jurisdiction, Alternative Remedy.

Facts:

1. Nature of the Litigation:
   – The petitioner, Madhuri Sameer Gokhale, challenged the assessment order dated 29 March 2022 and the consequential demand notice dated 30 March 2022 issued by the National Faceless Assessment Centre (NFAC) under Section 147 read with Sections 144 and 144B of the IT Act.
   – The petitioner contended that the reassessment for the Assessment Year (AY) 2014-15 was initiated beyond the 4-year limitation period and violated the principles of natural justice.

2. Who is Asking the Court and for What Remedy?
   – The petitioner sought a writ of certiorari to quash the impugned assessment order and demand notice, alleging illegality, arbitrariness, and breach of natural justice.

3. Reason for Filing the Case:
   – The petitioner claimed that the reassessment was initiated without proper jurisdiction, as the notice under Section 148 was issued beyond the 4-year period.
   – The petitioner also argued that the faceless assessment procedure under Section 144B was not followed, and she was not given adequate time to respond to the show-cause notice.

4. What Has Already Been Decided Until Now?
   – The petitioner’s detailed reply dated 24 March 2022, explaining the source of income from a family trust and HUF, was ignored by the assessing officer.
   – The assessing officer proceeded with a best judgment assessment under Section 144, adding Rs. 11.61 crores to the petitioner’s income, which the petitioner claimed had already been taxed in earlier years.

Issues:

1. Whether the reassessment under Section 147 of the IT Act was validly initiated beyond the 4-year limitation period?

2. Whether the faceless assessment procedure under Section 144B of the IT Act was followed, and whether the petitioner was given a reasonable opportunity to respond?

3. Whether the best judgment assessment under Section 144 of the IT Act was justified in the absence of fresh tangible material?

Submissions/Arguments:

1. Petitioner’s Submissions:
   – The reassessment notice under Section 148 was issued beyond the 4-year period, violating the first proviso to Section 147 of the IT Act.
   – The petitioner was not given adequate time to respond to the show-cause notice, and her request for an adjournment was ignored.
   – The petitioner’s detailed reply, supported by documentary evidence, was not considered by the assessing officer.
   – The reassessment was based on income already taxed in earlier years, and no fresh tangible material was provided to justify the reopening.

2. Respondents’ Submissions:
   – The reassessment was validly initiated under Section 148, and the petitioner had not filed a return for AY 2014-15 despite significant financial transactions.
   – The petitioner was given sufficient opportunity to respond, and the assessment order was passed after considering her reply.
   – The petitioner had an alternative remedy of filing an appeal under Section 246 of the IT Act, and the writ petition was not maintainable.