Failure to File ITR Bars Section 144B Relief: HC Dismisses Petition

Failure to File ITR Bars Section 144B Relief: HC Dismisses Petition

The assessee challenged reassessment proceedings initiated under Sections 148 and 148A(d) of the Income Tax Act for Assessment Year 2018–19. The matter stemmed from a Rs. 40 lakh property sale made under consent terms to settle a mortgage dispute. The sale proceeds were paid directly to the lender, and the petitioner did not file a return of income, claiming no money was received personally.

Despite being given a chance to respond under Section 148A(b) and clarifying that no income accrued, the Assessing Officer (AO) passed a Section 148A(d) order stating income had escaped assessment. The petitioner moved the High Court, alleging breach of natural justice and that no taxable income had arisen.

Issue before the Court: Can a company seek to quash reassessment proceedings for not filing a return after selling a property, on the ground that the sale proceeds were paid directly to a lender?

HC’s Decision: The High Court dismissed the petition in this matter. It was contended that merely because the sale proceeds were not credited to the petitioner’s account does not relieve it from the duty to report the transaction and compute potential capital gains. Since no return was filed, the Court ruled that the petitioner cannot claim a violation of Section 144B for lack of a personal hearing. The Hon’ble HC found the reassessment proceedings were valid, and thus the AO was directed to conclude the process within 12 weeks after granting a hearing.

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