An Assessing Officer must consider a reply filed before passing an order under Section 148A(d).

The petitioner challenged the order dated 18 March 2024 passed under Section 148A(d) of the Income Tax Act, 1961 and the consequential notice issued under Section 148.

A notice under Section 148A(b) was initially issued on 22 February 2024, requiring a response by 3 March 2024. On that date, the petitioner sought an adjournment, and the Assessing Officer adjourned the matter to 8 March 2024. The petitioner again sought two weeks’ time, but was granted only two days, until 10 March 2024, to file its reply.

The petitioner requested further time by email on 9 March 2024 and ultimately filed its reply on 15 March 2024. Despite the reply being available on record, the Assessing Officer passed the order under Section 148A(d) on 18 March 2024 without considering it.

The Revenue contended that the reply was filed beyond the deadline of 10 March 2024 and was therefore rightly disregarded.

Whether the Assessing Officer violated the principles of natural justice by passing an order under Section 148A(d) without considering the petitioner’s reply filed on 15 March 2024.

Whether the Assessing Officer was justified in restricting the petitioner’s statutory period for filing a reply and disregarding a reply filed before the order under Section 148A(d) was passed.

The Court applied Sections 148A(b) and 148A(d) of the Income Tax Act, 1961, governing the opportunity to respond to information suggesting escapement of income and the Assessing Officer’s decision on whether issuance of notice under Section 148 is warranted.

It also considered Section 148, under which the consequential reassessment notice was issued. The Court noted that the statute provides an assessee 30 days to furnish its reply.

The governing principle was that an assessee must receive a meaningful and fair opportunity of being heard, and material or a reply available to the Assessing Officer before the decision is made must be considered. Failure to consider such material constitutes an irregularity and violation of the principles of natural justice.

The Court held that the petitioner’s original notice allowed a response by 3 March 2024, and that the Assessing Officer had time available at least until 22 March 2024 to consider the reply.

In that context, reducing the effective period for reply to 10 March 2024, particularly after the petitioner had sought additional time by email on 9 March 2024, unjustifiably curtailed the petitioner’s statutory opportunity.

More significantly, the reply dated 15 March 2024 had already been uploaded and was available to the Assessing Officer before the order dated 18 March 2024 was passed. The Assessing Officer could therefore have considered it, but failed to do so.

This failure caused prejudice to the petitioner and rendered the decision-making process contrary to natural justice.

The Assessing Officer was directed to pass a fresh order under Section 148A(d) after considering the petitioner’s reply dated 15 March 2024 and without being influenced by the earlier order.

The Court clarified that it had expressed no opinion on the merits or on the jurisdiction to initiate reassessment proceedings, leaving those questions open for independent consideration by the Assessing Officer.

The pending application was also disposed of.