Assessment order set aside for denying real opportunity to present case during working hours

HC set aside assessment order u/s 143(3) for violating principles of natural justice. Court found opportunity granted to petitioner was illusory rather than real, noting that fixing time limits during working hours of notified date has been deprecated. Assessing officer invoked Sections 37 and 40 instead of referring matter to TPO. Relying on precedent where petitioner given time only till 11:30 AM to file objections before assessment order passed same day, HC held this denied effective opportunity to present case. Matter remanded to assessing officer for fresh decision with reasonable opportunity to petitioner.

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Issues:
Challenging an assessment order under Section 143(3) of the Income Tax Act, 1961 for violation of natural justice principles and incorrect invocation of sections 37 and 40 instead of referring to the Transfer Pricing Officer.

Analysis:
The petitioner contested the assessment order, arguing that inadequate time was granted to respond to the notice, rendering the opportunity illusory. Documents were submitted after the specified time, but the assessing officer did not consider them. The petitioner cited a previous court ruling emphasizing that documents filed throughout the working hours of the day should be considered. Additionally, the petitioner highlighted international transactions and the necessity to refer the matter to the Transfer Pricing Officer due to alleged profit shifting. The petitioner relied on a Supreme Court judgment endorsing Instruction No.3, which mandates TPO reference for significant transactions with associated enterprises. The failure to involve the TPO was deemed contrary to Instruction No.3 and unsustainable.

The respondents contended that adequate opportunities were provided, and documents submitted after the deadline were received post-assessment, justifying no interference with the order. However, the petitioner clarified that documents were submitted before the deadline, contradicting the respondent's claim. The court acknowledged the petitioner's argument regarding the illusory opportunity granted and referenced a previous case criticizing the fixation of time-limits during working hours as against natural justice principles. The court emphasized the importance of realistic opportunities for objections submission, even in the digital era, citing another case where an order passed without hearing the petitioner was set aside for violating natural justice principles.

Consequently, the court found merit in the petitioner's arguments, setting aside the assessment order and remanding the matter to the assessing officer for a fresh decision. The assessing officer was directed to provide a reasonable opportunity to the petitioner in line with the law, allowing the petitioner to submit objections within four weeks from receiving the order. The impugned order was overturned, and the writ petition was disposed of without costs, closing connected miscellaneous petitions.

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