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IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Shakdher, Girish Kathpalia, JJ.
Dauphin Travel Marketing Private Limited. – Appellant
Versus
Income Tax Officer, Ward 7(1), Delhi & Ors. – Respondents
W.P.(C) 8870 of 2023 & CM Nos.33516-17 of 2023
Decided On : 05-07-2023
Natural Justice - Income Tax Assessment - The court set aside the assessment order on the ground that the show cause notice did not accord a minimum of seven days to the petitioner to file a response.
Fact of the Case:
The petitioner challenged the assessment order for AY 2013-14, alleging a breach of natural justice as the notices were not sent to the correct email address and the petitioner was not given sufficient time to respond.
Finding of the Court:
The court set aside the assessment order and directed the AO to allow the petitioner to file responses to the notices within two weeks, and to open the portal for filing replies. The AO was given liberty to pass a fresh assessment order after considering the responses.
Issues: Breach of natural justice, incorrect communication of notices, insufficient time to respond.
Ratio Decidendi: The court held that the show cause notice did not accord a minimum of seven days to the petitioner to file a response, thereby breaching the principles of natural justice.
Final Decision: The assessment order was set aside, and the petitioner was given the opportunity to file responses within two weeks. The writ petition was disposed of in the aforementioned terms.
JUDGMENT
Rajiv Shakdher, J. (Oral)
CM No.33517/2023
1. Allowed, subject to just exceptions.
W.P.(C) 8870/2023 & CM No.33516/2023 [Application filed on behalf of the petitioner seeking interim relief]
2. At the outset, Mr Ved Jain, who appears on behalf of the petitioner, says that respondent nos.4 and 5 can be deleted from the array of parties.
2.1. It is ordered accordingly.
3. To complete the record, Mr Jain will file an amended memo of parties within the next ten (10) days.
4. Issue notice.
4.1. Mr Kunal Sharma, learned senior standing counsel, accepts notice on behalf of respondent nos.1 to 3, 6 & 7, i.e., the revenue.
5. Given the directions that we propose to issue, Mr Sharma says that he does not wish to file a counter-affidavit and he will argue the matter based on the record presently available with the court. Therefore, with the consent of the learned counsels for the parties, the matter is taken up for hearing and final disposal at this stage itself.
6. This writ petition concerns Assessment Year (AY) 2013-14.
7. Inter alia, the petitioner seeks to challenge the assessment order dated 25.05.2023.
8. Mr Jain says that challenge in the present petition is confined to the ground that there has been a breach of principles of natural justice, inasmuch as the notice dated 26.04.2023 issued under Section 142(1) of the Income Tax Act, 1961 [in short, "Act"] and the show-cause notice dated 12.05.2023 were not sent to the correct e-mail address of the petitioner.
9. According to Mr Jain, the correct e-mail address of the petitioner, as registered with the respondents/revenue, is: dtm.psc@gmail.com.
10. The record shows that the notice dated 26.04.2023 was sent to the following e-mail address: info@dtmindia.com.
10.1. Likewise, the show-cause notice dated 12.05.2023 proposing variation in income was also sent to the incorrect e-mail address, i.e., info@dtmindia.com. [See pages 209 and 215 of the case file].
11. Besides the aforesaid, it is pointed out by Mr Jain that the petitioner was granted time to file a response to the show-cause notice dated 12.05.2023, only up until 17.05.2023 (11:00 hours).
12. It is Mr Jain's submission that the petitioner became aware of the aforementioned notices [i.e., notices issued under Section 142(1) of the Act and the show-cause notice], only when the information uploaded in the designated portal was ferreted on 25.05.2023, and, accordingly, a request was made for accommodation.
13. As would be evident, this request was not considered, since the AO had proceeded to pass the assessment order dated 25.05.2023.
14. In support of his plea that the Assessing Officer (AO) was required to grant a minimum of seven (7) days for responding to the show-cause notice, reliance is placed on the judgment rendered by this court in Indo Laminates Pvt. Ltd. vs. Assessment Unit, Income Tax Department & Ors., 2023/DHC/000879.
15. At this stage, without getting bogged-down by the factual assertion made by the petitioner that the aforementioned notices were not directed to the correct e-mail address, we are inclined to set aside the assessment order on the ground that the show cause notice dated 12.05.2023 did not accord a minimum of seven (7) days to the petitioner to file a response.
15.1. It is ordered accordingly. The assessment order dated 25.05.2023 is set aside.
15.2. The petitioner is given leave to file response(s) to the notice dated 26.04.2023 issued under Section 142(1) of the Act and the show-cause notice dated 12.05.2023 within the next two (2) weeks.
15.3. To facilitate the filing of replies by the petitioner, the AO is directed to open the portal.
15.4. The AO will have liberty to pass a fresh assessment order, after taking into account the response(s), if any, that the petitioner may file, as indicated above, within the timeframe set forth hereinabove.
16. The writ petition is disposed of, in the aforesaid terms.
17. Consequently, the pending interlocutory application shall stand clos
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.
Failure to serve statutory show cause notices at the correct e-mail address before resorting to best judgment assessment renders the assessment order invalid under the Income Tax Act, 1961.
Violation of the principle of natural justice in the assessment process warrants setting aside the assessment order and remanding the matter for a decision in accordance with law.
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.
Breach of principles of natural justice and practical timeframe for gathering information for assessment orders.
A breach of natural justice occurs when an assessment order is finalized before the noticee's response deadline, invalidating the order.
The court established that adherence to procedural fairness, specifically adequate response time to Show Cause Notices, is essential in tax assessment proceedings.
Natural justice mandates that parties be given adequate time to respond to show cause notices, especially when new demands are presented.
Failure to consider a request for accommodation on medical grounds by the Assessing Officer amounted to a breach of principles of natural justice, leading to the setting aside of the impugned assessm....
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