Challenged order under Income Tax Act set aside for lack of natural justice

The Court set aside the challenged order and notice under the Income Tax Act, 1961, due to the respondent's failure to provide adequate time for the petitioner to respond, violating principles of natural justice. The petitioner was directed to file a reply within two weeks, and the respondent was instructed to facilitate the uploading process. A reasoned order was to be issued within eight weeks, without prejudging the merits, allowing all rights and contentions to remain open. The writ petition and pending applications were disposed of accordingly.

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Issues:
Challenge to order under Section 148A(d) of the Income Tax Act, 1961 and notice issued under Section 148 for Assessment Year 2018-19.

Analysis:
The petitioner challenged an order and notice issued under the Income Tax Act, 1961. The petitioner argued that despite filing an application for adjournment due to statutory compliances and collating financial records, the respondent passed an order erroneously stating the reply was devoid of merit. The petitioner contended that this violated principles of natural justice.

The Court noted that the petitioner has the right to adequate time to respond under Section 148A(b) of the Act. The Assessing Officer can provide up to thirty days for a response, extendable upon application by the assessee. The time given to the petitioner is excluded in computing the limitation for notice issuance under Section 148A(d).

Although the petitioner filed an adjournment application promptly, the respondent neither rejected nor directed a reply within the original stipulated time. This was deemed a violation of Section 148A(b). Citing a previous case, the Court emphasized the importance of providing adequate time for response.

Consequently, the impugned order and notice were set aside. The petitioner was directed to file a reply within two weeks, and the respondent was instructed to open the e-portal for uploading. The Assessing Officer could issue a supplementary notice for clarification. A reasoned order was to be passed within eight weeks, without commenting on the merits of the controversy, leaving all rights and contentions open.

With these directions, the writ petition and pending applications were disposed of.

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