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IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Shakdher, Tara Vitasta Ganju, JJ.
Indo Laminates Private Limited – Appellant
Versus
Assessment Unit, Income Tax Department – Respondent
W.P.(C) 1203 of 2023 & CM APPL. 4588-4589 of 2023
Decided On : 31-01-2023
Assessment Year - Writ Petition - The court quashed the impugned notices and order due to failure to adhere to the directions contained in the Standard Operating Procedure (SOP) for Assessment Unit, which required a minimum timeframe of seven days to be given to the noticee. The court directed the Assessing Officer (AO) to carry out a de novo exercise as per law.
Fact of the Case:
The petitioner filed a return for Assessment Year (AY) 2021-2022, which was picked up for scrutiny. The petitioner challenged the notices and assessment order issued by the Assessing Officer (AO).
Finding of the Court:
The court quashed the impugned notices and order, citing a failure to adhere to the directions in the Standard Operating Procedure (SOP) for Assessment Unit. The court directed the AO to carry out a de novo exercise as per law.
Issues: Challenge to notices and assessment order, failure to adhere to SOP for Assessment Unit, minimum timeframe requirement for noticee.
Ratio Decidendi: Failure to adhere to the directions in the Standard Operating Procedure (SOP) for Assessment Unit, which required a minimum timeframe of seven days to be given to the noticee, led to the quashing of the impugned notices and order.
Final Decision: The impugned notices and order were quashed, and the Assessing Officer (AO) was directed to carry out a de novo exercise as per law.
ORDER
[Physical Hearing/Hybrid Hearing (as per request)]
Rajiv Shakdher, J. (Oral)
CM APPL. 4589/2023
1. Allowed, subject to just exceptions.
W.P.(C) 1203/2023 & CM APPL. 4588/2023 [Application filed on behalf of the petitioner seeking interim relief]
2. This writ petition concerns Assessment Year (AY) 2021-2022.
3. The petitioner has laid challenge to the following notices and assessment order:
(i) notice dated 28.06.2022;
(ii) notice dated 09.12.2022;
(iii) assessment order dated 19.12.2022;
(iv) notice of demand dated 19.12.2022.
4. Issue notice.
4.1. Mr Abhishek Maratha, learned senior standing counsel, who appears on behalf of the respondents/revenue accepts notice.
5. In view of the directions that we propose to pass, Mr Maratha says that counter-affidavit need not be filed.
6. Therefore, with the consent of the learned counsel for the parties, the writ petition is taken up for hearing and final disposal, at this stage itself.
7. The record shows, that the petitioner had filed a return for the aforementioned AY i.e., AY 2021-2022 on 15.03.2022.
8. The petitioner's case was, however, picked up for scrutiny via Computer Assisted Scrutiny Selection (CASS) for carrying out the assessment in accordance with the scheme framed under Section 144B of the Income Tax Act, 1961 [in short `the Act.].
9. Accordingly, on 28.06.2022, a notice under Section 143(2) of the Act was issued.
10. This was followed by notices issued under Section 142(1) of the Act. It appears, that three notices were issued under the said provision i.e., notices dated 18.10.2022, 02.11.2022 and 11.11.2022. The petitioner replied to these notices on 08.12.20222.
11. A perusal of the record shows that a show-cause notice was issued by the Assessing Officer (AO) on 09.12.2022, without taking into account the fact that the petitioner had filed a reply on 08.12.2022. Via the show-cause notice dated 09.12.2022, the petitioner was given time to respond by 13.12.2022, up until 11:30 hours.
12. The petitioner avers, that on 14.12.2022, it attempted to lodge the reply to the show cause notice dated 09.12.2022, an attempt which failed as the e-proceedings window was closed. Consequently, the petitioner claims that, on 14.12.2022, an e-mail was forwarded at the following URL-"samadhan.faceless.assessment@incometax.gov.in" and "samadhan.faceless.penalty@incometax.gov.in."
13. It is also the petitioner's stand, that since no response was received qua its email dated 14.12.2022, it made a request on 16.12.2022 to the concerned jurisdictional AO via e-mail address to the following URL-"delhi.ito12.1@incometax.gov.in", "samadhan.faceless.assessment@incometax.gov.in" and samadhan.faceless.penalty@incometax.gov.in. This exercise, it appears, was repeated on 19.12.2022, when an e-mail of even date was forwarded from the following URL "samadhan.faceless.penalty@incometax.gov.in" to "adg3.systems@incometax.gov.in."
13.1. It appears, that despite these e-mails having been escalated to the system [i.e., adg3.systems@incometax.gov.in] by the NaFAC team, the petitioner's grievance was not resolved.
13.2. We may note, that in this context, our attention has been drawn to the document appended at page 297 of the case file.
14. Given the fact, that although the petitioner's reply dated 08.12.2022 was on record, a show-cause notice dated 09.12.2022 was issued, without having regard to the reply, we are inclined to quash the impugned notices and order. There was, to our minds, clearly a failure to adhere to the directions contained in Clause N.1.3 of the Standard Operating Procedure (SOP) for Assessment Unit (AU) dated 03.08.2022; which required a minimum timeframe of seven days to be given to the noticee i.e., the petitioner.
14.1. It is directed accordingly. The impugned notices and order are quashed.
14.2. Liberty is, however, given to the AO to carry out a de novo exercise, albeit, as per law.
14.3. To be noted, the said SOP has been framed in consonance with the provisions of Sect
Failure to adhere to the directions in the Standard Operating Procedure (SOP) for Assessment Unit, which led to the quashing of the impugned notices and order.
Procedural fairness and consideration of petitioner's response in assessment proceedings under the Income Tax Act
The failure to consider the petitioner's reply and grant a hearing led to the setting aside of the assessment order and the direction for a fair hearing and speaking order by the Assessing Officer.
Violation of principles of natural justice and failure to adhere to the timeline given in the notice led to the setting aside of the impugned assessment orders.
Compliance with procedural requirements and the right to a fair hearing are essential in proceedings under the Income Tax Act, 1961.
The central legal point established is the requirement to adhere to the principles of natural justice, including providing sufficient time for the party to respond to notices.
The necessity of issuing a show cause notice cum draft assessment order before making any upward revision in income for assessment under the Income Tax Act, 1961.
Failure to inform the petitioner about the decision on their request for accommodation constituted a breach of principles of natural justice, warranting the setting aside of the assessment order and ....
Breach of principles of natural justice in assessment proceedings under the Income Tax Act, 1961.
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