Tax Assessment Notice Upheld: Procedural Challenges Rejected, Appellate Remedy Directed with Expedited Hearing Timeline

The HC dismissed a writ petition challenging a tax assessment notice under Section 148. The Court held that procedural objections to the notice should have been raised earlier, and the petitioner cannot challenge the notice post-assessment. The Court found no violation of natural justice or jurisdiction, directing the petitioner to pursue appellate remedies. A four-week time was granted to approach the appellate authority, which was instructed to hear the case expeditiously.

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1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in this matter are:

• Whether the notice issued under Section 148 of the Income Tax Act, 1961 (the Act), in respect of the assessment year 2019-20, is valid and sustainable, particularly in light of the provisions of Section 151A of the Act and the scheme notified thereunder on 22nd November, 2022.
• Whether the issuance of the show-cause notice complied with the Standard Operating Procedure (SOP) for faceless assessment under Section 144B of the Act, especially regarding the prescribed response time.
• Whether the petitioner was afforded a fair opportunity to respond, including the supply of relevant documents necessary to make an effective representation.
• Whether the writ petition under Article 226 of the Constitution is maintainable against the assessment order passed under Section 147 of the Act, or whether the petitioner should be relegated to the alternative remedy of appeal.

2. ISSUE-WISE DETAILED ANALYSIS

Validity of the Notice under Section 148 vis-`a-vis Section 151A and the Notified Scheme

The petitioner challenged the notice issued under Section 148 of the Act on the ground that it was issued in contravention of Section 151A and the scheme notified by the Central Government on 22nd November, 2022. The petitioner contended that the notice was bad in law as it did not comply with the procedural safeguards mandated by the said provisions.

The Court noted that the petitioner did not raise any contemporaneous objection to the issuance of the Section 148 notice at the time it was received. Instead, the petitioner participated in the assessment proceedings initiated pursuant to the notice and only challenged the notice after the assessment order under Section 147 was passed.

The Court observed that no explanation was provided for the delay in challenging the notice at an earlier stage. Consequently, the Court held that the petitioner cannot be permitted to challenge the validity of the Section 148 notice by way of a writ petition filed after the assessment order has been passed. This reasoning is consistent with the principle that procedural objections to notices should be raised promptly to prevent abuse of process and undue delay.

Compliance with the Standard Operating Procedure (SOP) under Section 144B

The petitioner argued that the show-cause notice dated 18th March, 2025 was issued without adhering to the SOP for faceless assessment under Section 144B of the Act, as circulated by the Central Board of Direct Taxes on 3rd August, 2022. Specifically, the petitioner contended that the notice was issued without providing the standard seven days' response time.

Upon examination, the Court referred to clauses N.1.3.1 and N.1.3.2 of the SOP, which provide that although the ordinary response time is seven days, the SOP allows for curtailment of this period in view of the approaching limitation period for completion of assessment.

The Court found that in the instant case, the limitation period was indeed fast approaching when the notice was issued, justifying the shorter response time. Moreover, the petitioner had responded within the time allowed and did not raise any objection regarding the response period during the proceedings. The Court treated the contention of non-compliance with the SOP as an afterthought and rejected it.

Opportunity to Respond and Supply of Relevant Documents

The petitioner claimed that all relevant documents necessary to respond effectively were not supplied by the department despite requests. The petitioner acknowledged receipt of an excel sheet but contended that other essential documents were withheld.

The Court noted that most of these allegations pertained to the merits of the case rather than jurisdictional or procedural infirmities. The Court emphasized that an order passed under Section 147 is ordinarily appealable and cannot be challenged by a writ petition unless there is a positive case of violation of principles of natural justice, jurisdictional error, or statutory infraction.

Since the petitioner did not establish any such exceptional circumstance, the Court held that the writ jurisdiction was not invokable, and the petitioner should seek remedy through the appellate process.

Maintainability of Writ Petition against Assessment Order under Section 147

The Court reiterated the settled legal position that writ petitions under Article 226 challenging assessment orders are generally not maintainable when an efficacious alternative remedy such as appeal exists. The Court found no special or exceptional circumstances warranting invocation of writ jurisdiction in this case.

Accordingly, the Court declined to entertain the writ petition and directed the petitioner to approach the appellate authority for redressal of grievances.

Grant of Time to Approach Appellate Authority

Subsequent to dismissal of the writ petition, the petitioner sought additional time to file an appeal before the appellate authority. Considering the submissions and the fact that the writ petition was pending for some time, the Court granted four weeks' time for the petitioner to approach the appellate authority.

The Court further directed the appellate authority to hear and dispose of the appeal expeditiously, taking into account the observations made in the judgment and deciding all points raised by the petitioner on merits.

3. SIGNIFICANT HOLDINGS

The Court held:

"The petitioner cannot be permitted to challenge the said notice issued under Section 148 of the said Act by way of filing of writ petition after the assessment order has been passed."

"Although the ordinary response time for a show cause notice is seven days, the said SOP in itself embodies the power to curtail such period keeping in view the limitation date for completion of the assessment."

"The contention made by the petitioner regarding non-compliance of SOP is an afterthought and cannot be accepted by this Court."

"Ordinarily, an order passed under Section 147 of the said Act, which is otherwise appealable, cannot form subject matter of challenge in a writ petition under Article 226 of the Constitution of India unless the party approaching the Court comes with a positive case of violation of the principles of natural justice, jurisdictional error, statutory infraction or any special case."

"All the points raised by the petitioner in the writ petition can be heard and disposed of by the appellate authority if the petitioner chooses to prefer an appeal."

Core principles established include the necessity of timely challenge to notices under Section 148, the discretionary power within the SOP to shorten response times due to limitation constraints, and the preference for appellate remedies over writ petitions in tax assessment matters absent exceptional circumstances.

The final determination was that the writ petition was not maintainable and was dismissed, with liberty granted to the petitioner to pursue appeal within a stipulated timeframe, and the appellate authority directed to expeditiously adjudicate the matter on merits.

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