2023 (10) TMI 1040 - HC - Income Tax

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

M/s. Gemini Film Circuit, rep. by its Partner, Mrs. A. Saisiva Jothi. Versus The Additional/Joint/Deputy/Assistant Commissioner of Income Tax/Income Tax Officer, Delhi.

HC set aside assessment order u/s 144B for procedural violations. Petitioner was given only 5 days (3 working days excluding Sunday) to file ... Validity of assessment u/s 144B - Petitioner was granted only a short span of time, i.e. 5 days, and excluding the Sunday, which is a holiday, only three working days was given for filing their reply/objections - HELD THAT:- AO before passing any assessment order is that the AO, while issuing show cause notice shall provide sufficient time for the assessees to file their reply/objection, minimum of 21 days, unless and otherwise any specific time limit is fixed under the provisions of the Act; thereafter, shall afford an opportunity of personal hearing; in case, if the assessee is in need of any documents, which forms the basis for issuance of show cause notice, the same shall also be furnished to the assessee, as the case may be, wherever, it is required; and after conducting a full-fledged enquiry, shall conclude the assessment proceedings, in which, the AO has to deal with the queries/points, (which the assessee would raise/putforth in the form of reply/objections) in detail along with reasons for rejection of the reply, if any and thereafter, shall pass final assessment order in accordance with law. The above aspects are not scrupulously followed, the same would pave a way for the assessee to go on Appeal before the Appellate Authority and even in the Appeal, if the assessee is unable to succeed, ultimately, it will come to the scrutiny of this Court and Hon'ble Supreme Court, in which case, if the assessment order is set aside, the Department will loose it's revenue. Therefore, it is bounden duty of the Assessing Officer to pass a detailed order, providing reasons for rejection of the contention of the assessee. If any cryptic order is passed without touching upon the queries/contentions of the assessee, ultimately, it would be fatal to the assessee and also cause huge revenue loss to the revenue. Therefore, the orders to be passed by the Assessing Officer should always be a speaking order, safeguarding both the interest of the assessee and the Revenue. This Court is inclined to set aside the impugned order of assessment. 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/ObservationsThe 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 HearingThe 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 JusticeThe 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.