2021 (5) TMI 461 - HC - Income Tax

Court overturns assessment order due to natural justice violation, emphasizes fair process in income tax proceedings

Ekambaram Sukumaran Versus The Income Tax officer

The High Court of Madras, under the direction of Honourable Dr. Justice Anita Sumanth, addressed a challenge to an assessment order dated 23.03.2021 for ... Order passed before the time prescribed for filing the reply - Validity of assessment - violation of principles of natural justice - faceless assessment scheme - Pre-assessment notice was issued calling upon the petitioner to show cause why assessment should not be completed in line with the draft assessment order - HELD THAT:- In conclusion, the petitioner was called upon to submit his response by 23:59 hours of 23.03.2021.However, even prior to the elapse of time granted, the impugned order of assessment has come to be passed on the same day, i.e., 23.03.2021, one assumes during the working hours. Hence, there is a violation of principles of natural justice writ large of the document. One need hardly refer to the decision of the learned single Judge of this Court in the case of S.Velupalandar V. Deputy Commercial Tax Officer [1971 (8) TMI 42 - MADRAS HIGH COURT]wherein this Court has stated that it was incumbent upon an Officer to wait till the end of the working day when the matter had been posted to finalize proceedings. This is an even better case than in the matter of Velupalandar (supra), since the Assessing Officer had himself granted time till 23:59 hours on 23.03.2021. The impugned order is thus set aside. The petitioner will file its response to show cause notice dated 19.03.2021 within a period of two weeks from today and the assessment shall be completed de novo within a period of six (6) weeks from today, after hearing the petitioner. Issues Involved:Challenge to assessment order dated 23.03.2021 for assessment year 2018-19 under the Income Tax Act, 1961 based on violation of principles of natural justice.Analysis:Issue 1: Violation of Principles of Natural JusticeThe petitioner challenged the assessment order dated 23.03.2021, alleging a gross violation of principles of natural justice. The pre-assessment notice was issued on 19.03.2021, requiring the petitioner to respond by 23:59 hours of 23.03.2021. However, the impugned assessment order was passed on the same day, before the deadline, indicating a clear breach of natural justice principles. Reference was made to a previous judgment by a single Judge of the Court, emphasizing the importance of waiting until the end of the working day to finalize proceedings. The Assessing Officer in this case had granted time until 23:59 hours, making the violation even more apparent.Issue 2: Disposal of Writ PetitionThe Court set aside the impugned assessment order, directing the petitioner to file a response to the show cause notice within two weeks from the judgment date. The assessment was ordered to be completed afresh within six weeks from the judgment date after providing an opportunity for the petitioner to be heard. The Writ Petition was disposed of accordingly, with no costs imposed, and connected Miscellaneous Petitions were closed.In conclusion, the High Court of Madras, under the direction of Honourable Dr. Justice Anita Sumanth, addressed the challenge to the assessment order dated 23.03.2021 for the assessment year 2018-19, highlighting the violation of principles of natural justice. The Court set aside the impugned order, directing a fresh assessment process to be conducted within specified timelines, ensuring the petitioner's right to be heard and responding to the show cause notice. This judgment serves as a significant reminder of the importance of upholding natural justice principles in administrative proceedings under the Income Tax Act, 1961.