2023 (7) TMI 284 - HC - Income Tax

Court quashes assessment order for procedural non-compliance under Income-tax Act.

Shri Venkatesh Refineries Limited Through Its Managing Director Prasad Dinesh Kabre Versus Deputy Commissioner Of Income Tax Circle 1 And Others

The Court quashed the impugned assessment order dated 17th December 2022, issued under Section 143(3) r/w 144B of the Income-tax Act, 1961, due to ... Validity of assessment u/s 144-B r/w Section 143(2) - assessee seeked adjournment request as more time sought to file reply and when Petitioner attempted to upload it's answer/ explanation, he was intimate that the portal window was closed, than he emailed the National Faceless Assessment Centre (NFAC) but without responding whether, the Department was extending time or not Assessment Order was passed. HELD THAT:- Section 144B(1)(xii)(b) indicates that after the show cause notice is issued stating the variations prejudicial to the interest of the assessee, which are proposed to be made to the income of the assessee, he has to be called upon to submit as to why the proposed variation should not be made. Such show cause notice shall be served on the assessee through the National Faceless Assessment Centre. Clause (xiii) of Section 144B(1) mandates the Assessee to file his reply to the show cause notice on the date and time as specified therein or such time as may be extended on the basis of the application made in this regard to the NFAC, which shall forward the reply to the Assessment Unit. It is an open and shut case before us that the Petitioner indeed sought an adjournment till 16.12.2022 vide his email dated 08.12.2022, which is not denied by the Department. Clause (xiii) of Section 144B(1) indicates that the Assessee can file a reply on the date and time as specified or also within the extended time on the basis of his request application. There is no dispute that the Department shut down the window on 09.12.2022 and neither accepted the request of the Petitioner, nor rejected it. This Writ Petition is allowed. The impugned Assessment Order is quashed and set aside. Issues Involved:1. Validity of the impugned assessment order dated 17th December 2022.2. Compliance with procedural requirements under Section 144B of the Income-tax Act, 1961.3. Petitioner's right to request an adjournment and the Department's response to such requests.Summary:1. Validity of the Impugned Assessment Order:The Petitioner challenged the assessment order dated 17th December 2022, issued under Section 143(3) rws 144B of the Income-tax Act, 1961, along with the notice of demand and penalty notices issued on the same date. The Court examined the legality of these documents and quashed the impugned assessment order, setting it aside.2. Compliance with Procedural Requirements:The Court reviewed the procedural compliance under Section 144B of the Income-tax Act, 1961. It was observed that the Petitioner had filed its Income Tax Returns for the Assessment Year 2021-22 on 28.02.2022. The Department issued a show cause notice under Section 144-B r/w Section 143(2) on 02.12.2022. The Petitioner sought an adjournment until 16.12.2022, but the Department closed the portal on 09.12.2022 without responding to the adjournment request. The Court highlighted that Clause (xiii) of Section 144B(1) mandates the Assessee to file a reply within the specified or extended time, which was not adhered to by the Department.3. Petitioner's Right to Request an Adjournment:The Petitioner requested an adjournment via email on 08.12.2022, which was not addressed by the Department. The Court noted that the Department neither accepted nor rejected the adjournment request, leading to the closure of the portal on 09.12.2022. This action was found to be non-compliant with Section 144B(1)(xiii), which allows for an extension of time based on the Assessee's request.Conclusion:The Writ Petition was allowed, and the impugned Assessment Order dated 17.12.2022 was quashed and set aside. The Court issued the following directions:- The Department shall reopen the portal to allow the Petitioner to submit its explanation and documents.- If the portal is opened by 30.06.2023, the Department must notify the Petitioner via email.- The Petitioner must upload its reply and attachments by 10.07.2023.- If the Petitioner requests a personal hearing, it should be granted with at least five days' notice for preparation.- The Department's Standard Operating Procedure (SOP) dated 03.08.2022 issued by the NFAC, Delhi, must be followed.