2021 (10) TMI 1353 - HC - Income Tax

Validity of assessment - Non granting sufficient time to Petitioner - violative of the principles of natural justice - HELD THAT - As regards liberty prayed for to file a fresh Affidavit, we are not inclined to grant that liberty. This is because in our view, it would make no difference to the allegations contained in the Petition. With the Assistance of Dr. Shivaram and Mr. Suresh Kumar, we have gone through the Petition and the documents annexed thereto. We have also considered the Assessment Order. It is true that between 20/05/2021 and 25/05/2021 there was a lockdown in Mumbai and 22/05/2021 and 23/05/2021 were holidays. Therefore, even with a superhuman effort, Petitioner would not have been able to file the huge number of documents called for in the short period granted and therefore, passing of the Assessment Order without granting sufficient time to Petitioner is certainly violative of the principles of natural justice. We are inclined to quash the Assessment Order dated 25/05/2021 which we hereby do. The matter is remanded for de novo consideration. Dr. Shivaram states that response to the notice issued on 20/05/2021 will be filed within 2 weeks from today. Statement accepted. AO may consider the submissions made by Petitioner along with the documents and pass such order as he deems fit in accordance with law after giving a personal hearing to the Petitioner in accordance with the Rules. We also clarify that we have not made any observation on the merits of the case. The time between 25/05/2021 till today is excluded for the purpose of calculating time limit for passing re-Assessment Order. Petition disposed with no order as to costs.

Summary

Issues:
Impugning Assessment Order under Section 143(3) of the Income Tax Act, 1961 for AY 2018-19 due to insufficient time granted for submission of documents during lockdown.

Analysis:
1. The petitioner challenged the Assessment Order dated 25/05/2021, which computed the total income at Rs. 114,57,33,424/-, contrary to the declared total income of Rs. Nil for AY 2018-19. The petitioner received a notice under Section 142(1) on 20/05/2021, with a short deadline of 25/05/2021 for submission of various details. The lockdown in Mumbai and weekend holidays limited the petitioner's ability to compile the extensive documentation requested, which would have taken at least a month and exceeded 1000 pages. Despite this, the respondents proceeded with the Assessment Order, adding a significant amount to the petitioner's total income.

2. The respondents filed an Affidavit-in-Reply, which contained errors acknowledged by the court. The court allowed the withdrawal of the affidavit but denied the liberty to file a fresh one, as it would not impact the allegations in the petition. Upon reviewing the petition, documents, and Assessment Order, the court noted the unreasonable time frame given during the lockdown and holidays, which violated the principles of natural justice. Consequently, the court quashed the Assessment Order dated 25/05/2021 and remanded the matter for fresh consideration, emphasizing the importance of natural justice.

3. The court directed the petitioner to respond to the notice issued on 20/05/2021 within two weeks. The Assessing Officer was instructed to consider the petitioner's submissions and documents, granting a personal hearing before passing a new order in accordance with the law. The court clarified that no observations were made on the merits of the case and excluded the period between 25/05/2021 and the current date for calculating the time limit for passing a re-Assessment Order. Finally, the petition was disposed of with no order as to costs, ensuring fairness and procedural compliance in the assessment process.