HC quashes Section 144B assessment order for giving only 5 days response time instead of minimum 21 days required

HC set aside assessment order u/s 144B for procedural violations. Petitioner was given only 5 days (3 working days excluding Sunday) to file reply/objections, which was insufficient. Court held AO must provide minimum 21 days for response unless specific time limit prescribed, afford personal hearing opportunity, furnish relevant documents forming basis of show cause notice, and conduct full enquiry. Assessment orders must be detailed speaking orders addressing all queries/contentions with reasons for rejection. Cryptic orders without addressing assessee's contentions are fatal and cause revenue loss. Court emphasized AO's duty to safeguard both assessee and revenue interests through proper procedure.

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Issues Involved:
The challenge to the order of assessment passed by the respondent/Assessing Officer under the provisions of Income Tax Act, 1961 based on the show cause notice issued and the subsequent confirmation of proposals without providing sufficient time for reply and opportunity of personal hearing.

Summary:

Issue 1: Sufficiency of Time for Filing Reply/Observations
The petitioner contended that the show cause notice issued by the respondent was uploaded through online portal with insufficient time given for response. The Court acknowledged that the time granted, i.e., five days, was inadequate for the petitioner to file a detailed reply, especially considering the exclusion of a holiday. The Court emphasized the importance of providing a reasonable period, at least 21 days, for the assessee to respond effectively.

Issue 2: Opportunity of Personal Hearing
The petitioner argued that the show cause notice did not mention anything about the provision of a personal hearing, which is a requirement under Section 144 B of the Income Tax Act. The Court highlighted the necessity of affording the assessee an opportunity to be heard before issuing any prejudicial directions. It emphasized that the real intention of the Act is to provide a fair opportunity for the assessee to present their defense and that this opportunity should not be merely nominal.

Issue 3: Compliance with Principles of Natural Justice
The Court found that the impugned order of assessment was in violation of principles of natural justice, specifically the audi alteram partem rule. It stressed that the Assessing Officer must follow a specific procedure, including providing sufficient time for response, opportunity for personal hearing, and issuing a detailed, reasoned order to safeguard the interests of both the assessee and the Revenue.

Conclusion:
In light of the above reasons, the Court set aside the impugned order of assessment and remanded the matter to the respondent for fresh consideration. The respondent was directed to schedule a personal hearing for the petitioner, review any documents provided, conduct a thorough hearing, and pass a new assessment order. No costs were awarded, and the Writ Petition was allowed, with the connected Writ Miscellaneous Petition closed.

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