2021 (5) TMI 467 - HC - Income Tax

Order passed before the time prescribed for filing the reply - Validity of assessment - violation of principles of natural justice - petitioner's claim that the respondent, in breach of its own timeline, passed an assessment order under Section 143(3) read with Section 144B - petitioner placed its grievance before the revenue via the e-filing portal on 22.04.2021, in which, it, inter alia, stated that although at about 22 00 hours, it had tried to upload a response to the aforementioned show cause notice-cum-draft assessment order, the same could not be uploaded - HELD THAT - Since Revenue, seeks an accommodation to revert with instructions, list the matter on 19.05.2021. In the meanwhile, there shall be a stay on the operation of the impugned assessment order dated 22.04.2021, as well as the notice of demand issued under Section 156 and the notice initiating penalty proceedings under Section 270A of the Act. This order will operate till further orders of the court.

Summary

Issues: Breach of principles of natural justice in passing an assessment order under the Income Tax Act, 1961.

Analysis:
1. Breach of Principles of Natural Justice: The petitioner, represented by Mr. Ajay Vohra, argued that there was a breach of principles of natural justice in the assessment process. The show cause notice-cum-draft assessment order required a response by a specific deadline, but the assessment order was passed before the deadline, raising concerns about fairness and due process.

2. Violation of Timeline: The petitioner claimed that the respondent passed the assessment order under Section 143(3) read with Section 144B of the Income Tax Act for the assessment year 2018-2019 before the deadline specified in the notice. This violation of the timeline set in the notice raised doubts about the procedural regularity of the assessment process.

3. Grievance Submission: Upon discovering the premature assessment order, the petitioner lodged a grievance through the e-filing portal, highlighting the technical issue faced while trying to upload a response before the actual deadline. This action demonstrated the petitioner's efforts to address the procedural irregularities promptly.

4. Stay Order: The court, considering the prima facie breach of natural justice, granted a stay on the operation of the impugned assessment order, the notice of demand, and the penalty proceedings initiation notice. This stay order was issued to prevent any adverse consequences to the petitioner until the matter could be further examined and resolved.

5. Future Proceedings: The court scheduled the next hearing for 19.05.2021 to allow the respondent an opportunity to provide instructions. If the respondent decided to contest the petition, a counter-affidavit was to be filed. This procedural step ensured that both parties had a chance to present their arguments and evidence before the court made a final decision on the matter.