2021 (7) TMI 471 - HC - Income Tax

Denial of principle of natural justice - petitioner did not have sufficient opportunity to reply to the notices u/s 142(1) - HELD THAT - This Court finds that the principal of natural justice have not been adequately complied with in the present instance inasmuch as if the respondent s version is believed, the petitioner did not have sufficient opportunity to reply to the notices dated 21st April, 2021 under Section 142(1) of the Act, as there was a lockdown in Delhi between 19th April, 2021 at 10.00 P.M. and 07th June, 2021 at 5.00 A.M. The petitioner in his writ petitions in paragraph 25 has specifically mentioned in detail the particulars of a large number of documents that were in his possession and that he would have placed on record to clarify the issues raised by the Assessing Officer. This Court finds merits in the submission that there has been violation of principles of natural justice in the present instance. Matters are remanded back to the Assessing Officer to pass fresh assessment orders.

Summary

Issues:
Challenging assessment orders under Section 153A and 143(3) of the Income Tax Act 1961, notices of demand under Section 156, notices of penalty under Section 274 read with Section 271(1)(c) for Assessment Years 2013-14 to 2019-20.

Analysis:
The petitioner challenged assessment orders under Sections 153A and 143(3) of the Income Tax Act 1961, along with notices of demand under Section 156 and notices of penalty under Section 274 read with Section 271(1)(c) for various Assessment Years. The petitioner contended that the assessment orders were passed in violation of natural justice principles and without providing an effective hearing. The petitioner claimed that an email from the Income Tax Department led them to believe that the deadline for responding to a notice was extended indefinitely due to the Covid-19 lockdown. This lack of opportunity to respond resulted in significant financial demands and penalty proceedings against the petitioner.

The respondent argued that the initial notices were issued by the Income Tax Department, but the subsequent email granting an extension was not from them. The respondent contended that considering the initial notices would satisfy the principles of natural justice. However, the Court found that there was inadequate compliance with natural justice principles due to the limited opportunity given to the petitioner to reply during the lockdown period. The petitioner had also detailed the documents they possessed to clarify issues raised by the Assessing Officer.

Consequently, the Court held that there was a violation of natural justice principles. The impugned orders were set aside, and the matters were remanded to the Assessing Officer for fresh assessment orders. The Assessing Officer was directed to decide on the notices under Section 142(1) by providing a reasoned order after giving the petitioner an opportunity to be heard. The petitioner was instructed to file responses within two weeks and appear before the Assessing Officer on a specified date. The writ petitions and pending applications were disposed of, with the order to be uploaded on the website and forwarded to the counsel via email.