2020 (4) TMI 726 - HC - Income Tax

Penalty u/s 271(C) - proceeding initiated against u/s 201 (1) (1A) - no-reply to show cause notice - request for a period of three weeks to respond to the same on account of the lockdown declared by the Government of India across India so as to effectively deal with the Covid-19 pandemic - HELD THAT - Immediately after the lockdown is withdrawn by the Government, a period of two weeks reckoned therefrom is granted to the petitioner to reply to the Notices to the show cause issued by the respondent. Immediately after receiving replies to the Notices to show cause, the respondent shall be at liberty to take further steps in both the matters, in accordance with law. Both the petitions are disposed of alongwith the pending applications in terms of the aforesaid statement made by the learned Senior Standing Counsel of the respondent/Department and the order passed above.

Issues:
1. Petition to quash orders by Income Tax Officer for Assessment Years 2012-13 and 2013-14 under Income Tax Act.
2. Allegation of undue haste in passing impugned orders amidst COVID-19 lockdown.
3. Request for time extension to respond to show cause notices.
4. Contradictory observations in impugned order.
5. Withdrawal of impugned orders by respondent/Department.
6. Granting time extension to petitioner to reply to show cause notices post-lockdown.

Analysis:
1. The petitioner filed two writ petitions seeking to quash orders passed by the Income Tax Officer for Assessment Years 2012-13 and 2013-14 under the Income Tax Act. The petitions also sought to quash demand notices and penalty proceedings initiated by the Income Tax Department.

2. The main grievance raised by the petitioner was the alleged undue haste by the respondent in passing the impugned orders amidst the COVID-19 lockdown. The petitioner had requested an extension of three weeks to respond to show cause notices due to the lockdown situation, but the respondent proceeded with issuing further notices and eventually passing the impugned orders.

3. The petitioner had promptly responded to the initial show cause notices by requesting more time to gather necessary information, citing the lockdown as a hindrance. Despite repeated requests for extension, the respondent did not grant additional time, leading to the passing of the impugned orders.

4. The impugned order itself contained contradictory observations where the Income Tax Officer noted the petitioner's request for an adjournment but later deemed the contentions raised by the petitioner as meritless. This inconsistency in the order raised concerns about the decision-making process.

5. During the proceedings, the respondent, through the Senior Standing Counsel, informed the court about the decision to withdraw the impugned orders for both assessment years and provide the petitioner with an opportunity to reply to the show cause notices issued earlier.

6. The court, considering the circumstances, disposed of both petitions and granted a two-week period post-lockdown withdrawal for the petitioner to respond to the show cause notices. Following the receipt of replies, the respondent was permitted to take further steps in accordance with the law, ensuring a fair opportunity for the petitioner to present their case.

This detailed analysis covers the key issues raised in the judgment, highlighting the sequence of events, legal arguments, and the final resolution provided by the court.

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