Back
IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Shakdher, Girish Kathpalia, JJ.
Prime Asset Reconstruction Company Limited – Appellant
Versus
Central Board of Direct Tax & Ors. – Respondents
W.P.(C) 8068 of 2023
Decided On : 01-06-2023
Income Tax Act - Assessment Order - The court set aside the assessment order and directed the Assessing Officer to issue a notice to the petitioner, grant a hearing, and pass a speaking order addressing the contentions raised by the petitioner.
Fact of the Case:
The petitioner challenged the assessment order and demand notice issued under the Income Tax Act, alleging that their reply to a show-cause notice was not taken into account and a hearing was not granted.
Finding of the Court:
The court found that the petitioner's reply was not considered, and no hearing was granted, leading to the decision to set aside the assessment order and relegate the petitioner to the stage of the show-cause notice and the reply filed.
Issues: Challenge to assessment order, demand notice, and related notices under the Income Tax Act.
Ratio Decidendi: Failure to consider the petitioner's reply and grant a hearing necessitated setting aside the assessment order and directing the Assessing Officer to issue a notice, grant a hearing, and pass a speaking order.
Final Decision: The writ petition was disposed of by setting aside the assessment order and directing the Assessing Officer to issue a notice, grant a hearing, and pass a speaking order. The pending application was also closed.
JUDGMENT
Rajiv Shakdher, J. (Oral)
CM APPL. 31047/2023
1. Allowed, subject to just exceptions.
W.P.(C) 8068/2023 and CM APPL. 31046/2023 [Application filed on behalf of the petitioner seeking interim relief]
2. Issue notice.
2.1. Mr Aseem Chawla, learned senior standing counsel, who appears on behalf of the respondents/revenue, accepts notice.
3. Given the directions that we propose to pass, Mr Chawla says that he does not wish to file a counter-affidavit in the matter, and he will argue the matter, based on the record presently available with the Court.
3.1. Therefore, with the consent of learned counsel for the parties, the writ petition is taken up for hearing and final disposal, at this stage itself.
4. This writ petition seeks to challenge the assessment order dated 03.05.2023 passed under Section 143(3) read with Section 147 and 144B of the Income Tax Act, 1961 [in short, "Act"].
4.1. In addition thereto, challenge is also laid to the demand notice of even date i.e., 03.05.2023 issued under Section 156 of the Act.
4.2. Besides this, the petitioner has also laid challenge to the following notices and order:
(i) Notice dated 24.05.2021 issued under Section 148A(b) of the Act.
(ii) Letter dated 30.05.2022 issued under Section 148A(b) of the Act.
(iii) Order dated 25.07.2022 passed under Section 148A(d) of the Act.
(iv) Consequential notice dated 25.07.2022 issued under Section 148 of the Act.
5. Ms Smriti Sahay, who appears on behalf of the petitioner, says that prior to the impugned assessment order being passed, a show-cause notice dated 03.03.2023 was issued, proposing variation in income sought to be taxed. It is pointed out, that the petitioner was called upon to respond to the said show-cause notice by 10.03.2023.
5.1. Ms Sahay says, that a detailed reply dated 04.04.2023 was submitted by the petitioner, wherein inter alia, a request was made for grant of hearing, albeit via video-conferencing (VC).
5.2. Ms Sahay submits, that while passing the assessment order, the reply filed by the petitioner has not been taken into account. It is also submitted by Ms Sahay, that the hearing was not granted, despite a request being made in that behalf by the petitioner.
6. The record, as presently available with the Court, establishes that neither the reply filed by the petitioner was taken into account, nor was hearing granted to the petitioner.
7. Therefore, according to us, the best way forward would be to set aside the assessment order, and relegate the petitioner to the stage of show-cause notice dated 03.03.2023, and the reply filed qua the said notice.
7.1. It is ordered accordingly.
8. The Assessing Officer (AO) will issue a notice to the petitioner, indicating the date and time of hearing. The AO will permit the petitioner to be represented by an authorised representative.
9. Needless to add, the AO will pass a speaking order, which will deal with the contentions raised by the petitioner in the reply dated 04.04.2023. A copy of the order will be furnished to the petitioner.
10. The writ petition is disposed of in the aforesaid terms.
11. Consequently, pending application shall also stand closed.
12. Parties will act based on the digitally signed copy of the order.
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.
The Assessing Officer must provide adequate reasoning for reassessment actions and ensure compliance with natural justice principles.
The court emphasized the importance of considering the petitioner's reply and according a personal hearing before passing an assessment order under the Income Tax Act, 1961.
The denial of personal hearing sought by the petitioner constituted a breach of principles of natural justice, leading to the setting aside of the order and notice.
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.
Procedural fairness and consideration of petitioner's response in assessment proceedings under the Income Tax Act
The impugned assessment order and consequential notices were set aside as they were passed without issuance of a show cause notice-cum-draft assessment order, as required by Section 144B of the Act a....
Compliance with procedural requirements and the right to a fair hearing are essential in proceedings under the Income Tax Act, 1961.
A personal hearing is essential in tax assessment procedures to ensure administrative fairness; failure to provide one invalidates the assessment orders.
The assessment order was set aside due to breach of natural justice, specifically failure to consider the petitioner's objections filed before the order was made.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
