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IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Shakdher, Girish Kathpalia, JJ.
Jyoti Narang – Appellant
Versus
Income Tax Officer – Respondent
W.P.(C) 9289 of 2023 & CM Appl.35372 of 2023
Decided On : 14-07-2023
Natural Justice - Breach of Principles of Natural Justice - Opportunity to Respond to Show-Cause Notice
Fact of the Case:
The petitioner was issued a show-cause notice proposing variation in income, but the notice was directed to an incorrect email address, depriving the petitioner of the opportunity to respond.
Finding of the Court:
The court set aside the impugned assessment order, penalty, and demand notices, and granted the petitioner an opportunity to file a response to the show-cause notice.
Issues: Breach of principles of natural justice, incorrect communication of show-cause notice, denial of opportunity to respond.
Ratio Decidendi: The court emphasized the importance of affording the petitioner a fair opportunity to respond to the show-cause notice and held that the incorrect communication of the notice amounted to a breach of natural justice.
Final Decision: The writ petition was disposed of in favor of the petitioner, granting them the opportunity to file a response to the show-cause notice and directing the Assessing Officer to pass a speaking order.
JUDGMENT
[Physical Hearing/Hybrid Hearing (as per request)]
Rajiv Shakdher, J. (Oral)
1. Issue notice.
1.1 Mr. Sunil Agarwal, learned senior standing counsel accepts notice on behalf of the respondent/revenue.
2. In view of the directions that we intend to pass, Mr Agarwal says, that no counter-affidavit is required to be filed, and he will rely on the record presently available with the Court.
3. Insofar as the petitioner is concerned, the principal grievance is that there has been a breach of principles of natural justice.
4. The record shows, that the petitioner was issued a show-cause notice dated 09.05.2023 (SCN) proposing variation in income.
4.1 Via the SCN, the petitioner was given time to file a response, albeit by 16.05.2023 (12:04 Hrs.).
5. However, it appears that the notice was directed to an incorrect email address. The e-mail address to which the SCN was directed is "dadasumit75@gmail.com".
6. According to the petitioner, the correct e-mail address is "hridaanfurnitures@gmail.com".
6.1 The petitioner claims, that even in the return of income filed by her, the same e-mail address is given i.e., "hridaanfurnitures@gmail.com".
7. Consequently, the submission is that the petitioner had no opportunity to respond to the SCN, and therefore seek a personal hearing in the matter.
8. Mr Sunil Agarwal, learned senior standing counsel, who appears on behalf of the respondent/revenue, says that on merits, there is a lot to be said, though that stage will arise, once a response is filed.
9. In view of the above, according to us, the best way forward would be to set aside the impugned assessment order, and grant an opportunity to the petitioner to file a response to the SCN.
10. It is ordered accordingly.
11. The impugned order dated 23.05.2023 is set aside.
11.1 Consequently, the penalty and demand notices of even date, i.e., 23.05.2023, shall also collapse.
12. The petitioner will file a response to the aforementioned SCN, within the next four weeks.
13. The Assessing Officer (AO) will open the designated portal to enable the petitioner to upload the response. The AO will also issue a notice to the petitioner, indicating therein, the date and time of hearing.
14. Consequently, the impugned demand and penalty notice will also collapse.
15. Needless to add, the AO will pass a speaking order; a copy of which will be served on the petitioner.
16. The above-captioned writ petition is disposed of in the aforesaid terms.
17. Parties will act based on the digitally signed copy of the order.
The court emphasized the principle of natural justice and the right to be heard, setting aside the impugned assessment order due to the denial of the petitioner's opportunity to respond to the show-c....
Violation of Standard Operating Procedure (SOP) and breach of natural justice warrant setting aside assessment order and notices, and necessitate a de novo exercise by the Assessing Officer.
Breach of principles of natural justice in assessment 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.
Procedural fairness and consideration of petitioner's response in assessment proceedings under the Income Tax Act
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 ....
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.
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.
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.
The court's decision was based on the principle that a penalty notice issued based on an assessment order that has been set aside by a coordinate Bench of the court cannot be sustained.
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