Assessment order under section 143(3) and 144B set aside for insufficient response time to show cause notice

The HC set aside an assessment order under section 143(3) read with section 144B for violating principles of natural justice. While the petitioner was given adequate time to request personal hearing through the e-filing portal's video conferencing option and failed to utilize it properly, the court found that a subsequent show cause notice dated March 15, 2024 requiring response by March 19, 2024 provided insufficient time. The petitioner had only one working day to respond, violating the Standard Operating Procedure requiring 7 days response time. The court remanded the matter, directing the assessing officer to reactivate the portal and allow the petitioner 15 days to respond to the show cause notice.

---

---

Issues:
Challenge to show cause notice and assessment order under Income Tax Act, failure to provide adequate opportunity for response, violation of principles of natural justice, statutory infraction, obligation to afford personal hearing, validity of assessment order, alternative remedy of appeal, sufficiency of response time, violation of Standard Operating Procedure, remand of the matter, liberty to file response, direction to activate portal for response submission, setting aside demand and penalty proceedings.

Analysis:
The petitioner challenged a show cause notice and an assessment order issued under the Income Tax Act, alleging a lack of opportunity to respond adequately. The petitioner's advocate argued that the respondent failed to provide a proper chance for the petitioner to respond to the notice, violating principles of natural justice and statutory obligations. The petitioner was given a short time frame of one working day to respond, contrary to the requirement of affording a personal hearing as per Section 144B(6)(vii) of the Act.

The respondent contended that the petitioner had the option to request a personal hearing by clicking a specific button on the e-filing portal, which was not utilized by the petitioner. It was argued that the petitioner was given reasonable opportunity to respond, and the assessment order was passed after seven working days from the notice issuance, indicating no violation of natural justice. The respondent highlighted the availability of an appeal as an alternative remedy, suggesting that the petition should not be entertained.

The court found that despite the petitioner's request for a personal hearing in a previous response, the respondent was not obligated to provide a hearing without a formal application as per portal guidelines. The court noted that the respondent did not notify the petitioner about the 7-day response time as per the Standard Operating Procedure, leading to a violation of natural justice. Consequently, the assessment order was set aside, and the matter was remanded back to the respondent for proper handling.

The court directed the petitioner to file a response within 15 days of receiving the order, with the respondent activating the portal for submission and personal hearing selection. Failure to respond within the specified time would allow the respondent to proceed with the matter. Additionally, the demand and penalty proceedings were set aside. The judgment emphasized the importance of adhering to procedural fairness and providing adequate opportunities for taxpayers to respond in income tax proceedings.

---