2022 (9) TMI 839 - HC - Income Tax

Court sets aside assessment orders due to procedural errors and lack of natural justice, grants petitioners opportunity to respond.

M/s. KJ Quarries Private Limited, Reprsented by its Managing Director G. Kalyan Kumar Versus The Deputy Commissioner of Income Tax-2, National e-assessment Circle, Delhi.

The court found multiple violations of natural justice principles, including non-receipt of show cause notices, lack of personal hearings, errors in ... Procedure for assessment - scope of e-Assessment Scheme notified vide Notification 61 dated 12.09.2019, as amended by Notification No.60 dated 13.08.2020, and the procedure for assessment thereunder, especially clause (5), in terms of which, e-assessments have been finalised - HELD THAT:- Admittedly, there have been violations of timelines as well as procedure in the framing of the assessments, both on the part of the petitioners as well as the respondent/Income Tax Department. One reason for this is the pandemic that stood in the way of proper and timely compliance and secondly, lack of familiarity with the new procedure that had been introduced. For both the aforesaid reasons, the learned counsels for the petitioners as well as the learned Standing Counsel appearing for the Income Tax Department, in one voice, would agree that the following orders that have been passed in each writ petition would be taken to be consent orders. They request that the Court fix timelines afresh in all matters and undertake that the timelines so set out, will be adhered to scrupulously. Denial of natural justice - non providing of personal hearing - HELD THAT:- As passing of the assessment order without a personal hearing, moreover attempting to justify the same, is not proper and in my view, vitiates the assessment order, which is set aside. A link for personal hearing shall be sent to the petitioner and the petitioner shall be heard within a period four weeks. An order of assessment shall be passed within a period of eight weeks from the date of conclusion of personal hearing. Since the petitioner states that the time granted for filing reply at the first instance was inadequate, the petitioner shall also be permitted to file additional reply upon conclusion of the personal hearing. The entirety of the exercise as aforesaid shall be completed within a period of 90 days from the date of issue of certified copy of this order. The writ petition is allowed in the above terms. Issues Involved:1. Violation of principles of natural justice.2. Non-receipt of show cause notices.3. Lack of personal hearing.4. Errors in assessment orders.5. Non-compliance with procedural requirements under the Faceless Assessment Scheme.6. Inadequate time for response to show cause notices.7. Discrepancies between show cause notices and final assessment orders.8. Additional issues addressed in final assessment orders not included in show cause notices.Issue-wise Detailed Analysis:1. Violation of Principles of Natural Justice:- W.P.No.12572 of 2021: The petitioner claimed non-receipt of the show cause notice. The court found that the notice was not sent to the petitioner directly, violating principles of natural justice. The assessment order dated 31.03.2021 was set aside.- W.P.No.13580 of 2021: The petitioner did not receive communication regarding the adjournment request, leading to a violation of natural justice. The assessment order dated 25.05.2021 was set aside.- W.P.No.13821 of 2021: The petitioner did not receive physical notice or proper email communication. The assessment order dated 10.04.2021 was set aside.- W.P.No.13990 of 2021: The petitioner was denied a personal hearing, which was deemed necessary for compliance with natural justice. The assessment order dated 21.06.2021 was set aside.- W.P.No.15235 of 2021: The petitioner requested a personal hearing, which was not granted, violating natural justice. The assessment order dated 28.04.2021 was set aside.- W.P.No.21334 of 2021: The petitioner's request for a personal hearing was ignored, leading to a violation of natural justice. The assessment order dated 21.09.2021 was set aside.- W.P. No.12024 of 2021: The petitioner was not heard before the assessment order was passed, violating natural justice. The assessment order dated 23.04.2021 was set aside.2. Non-receipt of Show Cause Notices:- W.P.No.12572 of 2021: The show cause notice was sent to the Chartered Accountant's email, not directly to the petitioner. The assessment order was set aside.- W.P.No.13821 of 2021: Notices were uploaded on the website without notifying the petitioner via SMS or email. The assessment order was set aside.3. Lack of Personal Hearing:- W.P.No.13990 of 2021: The petitioner requested a personal hearing, which was not provided. The assessment order was set aside.- W.P.No.15235 of 2021: Despite requesting a personal hearing, the petitioner was not granted one. The assessment order was set aside.- W.P.No.21334 of 2021: The petitioner's request for a personal hearing was ignored. The assessment order was set aside.4. Errors in Assessment Orders:- W.P.No.14118 of 2021: The assessment order contained errors and included issues not related to the petitioner. The draft order dated 08.05.2021 and the assessment order dated 07.06.2021 were set aside.5. Non-compliance with Procedural Requirements:- W.P.No.12572 of 2021: The procedure for sending notices was not followed. The assessment order was set aside.- W.P.No.13580 of 2021: The officer did not communicate the decision on the adjournment request. The assessment order was set aside.- W.P.No.13821 of 2021: Notices were uploaded without proper notification. The assessment order was set aside.- W.P.No.13990 of 2021: The website did not have the feature for requesting a personal hearing. The assessment order was set aside.- W.P.No.21334 of 2021: The extension of time for filing a reply was not communicated to the petitioner. The assessment order was set aside.6. Inadequate Time for Response:- W.P.No.12024 of 2021: The show cause notice granted very limited time for response, leading to inadequate opportunity to respond. The assessment order was set aside.7. Discrepancies Between Show Cause Notices and Final Assessment Orders:- W.P.No.14118 of 2021: The final assessment order addressed additional issues not included in the show cause notice. The assessment order was set aside.- W.P.No.12024 of 2021: The final assessment order dealt with additional issues not proposed in the show cause notice. The assessment order was set aside.8. Additional Issues Addressed in Final Assessment Orders:- W.P.No.14118 of 2021: The final assessment order included issues beyond those in the show cause notice. The assessment order was set aside.- W.P.No.12024 of 2021: The final assessment order addressed additional issues not included in the show cause notice. The assessment order was set aside.Common Orders:- In all cases, the court directed that the petitioners be given an opportunity to file replies and be heard personally. The assessment orders were set aside, and the respondents were instructed to complete the reassessment process within 90 days from the date of receipt of the certified copy of the order. If the petitioners failed to respond within the given time, the impugned orders would stand revived without further reference.