IMPORTANT POINT
The court established that adherence to procedural fairness, specifically adequate response time to Show Cause Notices, is essential in tax assessment proceedings.

JUDGMENT :

(G.S. Kulkarni, J.) :

1. This petition under Article 226 of the Constitution of India assails the Assessment Order dated 27 March, 2024 (“Assessment Order”) passed by Respondent No.2 under the provisions of Section 144 read with Section 144B of the Income Tax Act, 1961 (“the Act”).

2. The primary grievance as raised by the Petitioner is that prior to the Assessment Order being passed, the Petitioner was issued a Show Cause Notice dated 22 March, 2024 (“Show Cause Notice”) (Exhibit “G”) calling upon the Petitioner to show cause on the variations which were sought to be made, in the return of income, as filed by the Petitioner. Paragraph 3 of said Show Cause Notice recorded that the Petitioner should submit its response through its registered e-filing account by 17:30 hours of 23 March, 2024. The said paragraph reads thus :

3. Kindly submit your response through your registered e- filing account at www.incometax.gov.in by 17.30 hours of 23/03/2024, whereby you may either :-

a. accept the proposed variation ; or

b. file your written reply objecting to the proposed variation ; or

c. If required, in addition to filing written reply you may request for personal hearing so as to make oral submissions, or present your case. The request can only be made by clicking the Seek Video Conferencing button available against the SCN, in the view notices of this proceeding in the e-proceedings tab on e-filing portal. The request can be made only before expiry of compliance date & time through video conference. UL>

3. The Petitioner contends that such notice was generated and uploaded on the portal on 22 March, 2024 at 20:03:29 IST. Further, the next day (i.e. 24 March, 2024) was a Saturday. The Petitioner objected to the said Show Cause Notice by its reply dated 23 March, 2024, wherein the Petitioner stated that the Petitioner being granted less than 24 Hours to respond the Show Cause Notice, was in breach of the principles of natural justice, which would amount to a flaw in the decision making process. The relevant extract of the Petitioner’s objection require to be noted :

1……The SCN was issued on 22-03-2024 at 20:03:29 IST and the assessee was asked to comply to the SCN on 23-03-2024 by 17:30 IST. The assessee was asked to comply to the notice by providing less than 24 hours time. The assessee submits that giving less than 24 hours time to reply to SCN is a flaw in decision making process.

2. The department should have a bonafide intention to provide fair opportunity to the assessee. The SCN issued at the fag end of the limitation period curtails the rights of the assessee. The SCN is issued to provide fair opportunity to the assessee to put forth his defense and such opportunity should be extended to the assessee in a real nature.

3. The assessee begs to place reliance on the decision of the Hon’ble Jurisdictional High Court of Karnataka in the case of MMG Constructions LLP Vs. Union of India in WP No. 21638/2021 dated 13-12-2021 wherein it was held that allowing less than 24 Hours to respond to SCN is violation of principles of natural justice and hence the entire proceedings was quashed for violation of principles of natural justice.”

4. The Assessing Officer replied to such objections as raised by the Petitioner, by communication dated 24 March, 2024 addressed to the Petitioner, which was made available on the Petitioner’s portal. Such communication recorded that as a matter of last opportunity to the Petitioner to make proper and complete submissions with all documentary evidence, time to reply to the Show Cause Notice was extended upto 26 March, 2024 upto 11:30 AM. Such intimation was uploaded by the Assessment Unit, Income Tax Department on 24 March, 2024 at 13:01:43 IST. The Petitioner, however, could not submit its response within the short extended time as specified by the communication dated 24 March, 2024. In these circumstances, the assessment of the Petitioner’s return was completed in the impugned Assessment Order dated 24 Ma