2021 (8) TMI 1052 - HC - Income Tax

Assessment order passed u/s 143(3) without giving Petitioner/assessee a meaningful opportunity of being heard - violation of priciples of Natural justice - HELD THAT - This Court finds that the notices dated 10th February, 2020, 10th March, 2021 and 20th March, 2021 had been issued u/s 142(1) of the Act and not under Section 144B of the Act. Consequently, the statutory mandate as enshrined in Section 144B of the Act has not been complied with in the present instance. This Court also takes judicial notice of the fact that between 19th April, 2021 and 27th April, 2021 there was a complete lockdown in the city of Delhi. Accordingly, this Court is of the view that Petitioner has not been given an adequate and meaningful opportunity to respond to the draft assessment order cum show cause notice dated 20th April, 2021 and there has been a violation of principles of natural justice. Consequently, the impugned Assessment Order dated 27th April, 2021 passed under section 143(3) of the Act is set aside and the matter is remanded back to the Respondent for taking necessary steps in accordance with law. With the aforesaid directions, the present petition along with pending applications stands disposed of.

Summary

Issues:
Challenge to assessment order passed under Section 143(3) of the Income Tax Act, 1961 alleging lack of opportunity to be heard due to lockdown and adjournment application.

Analysis:
The petitioner challenged the assessment order dated 27th April, 2021, passed under Section 143(3) of the Income Tax Act, 1961, on the grounds of not being given a meaningful opportunity to be heard. The petitioner was asked to file a response by 23rd April 2021 through a draft assessment order cum show cause notice. However, due to a complete lockdown in Delhi from 19th April 2021, the petitioner requested an adjournment on 25th April 2021 as it couldn't prepare the response. Despite this, the respondent passed the assessment order on 27th April 2021, falsely stating that the petitioner had not filed a reply and had agreed to the additions made by the revenue.

The respondent argued that the adjournment application filed after the last date for filing the response was inconsequential. Additionally, the respondent claimed that three earlier notices had been issued to the petitioner, thereby complying with the principles of natural justice. However, upon review, the Court found that the notices were issued under Section 142(1) of the Act and not under Section 144B, thus not meeting the statutory mandate.

The Court acknowledged the lockdown in Delhi between 19th April 2021 and 27th April 2021, noting that the petitioner was not given a meaningful opportunity to respond to the draft assessment order. Consequently, the Court held that there was a violation of principles of natural justice. The impugned Assessment Order dated 27th April 2021 was set aside, and the matter was remanded back to the respondent for further action in accordance with the law. The petition along with pending applications was disposed of with these directions.

In conclusion, the Court's decision emphasized the importance of providing a fair opportunity to be heard, especially in cases where external circumstances such as a lockdown impact the ability to respond within the stipulated timelines. The judgment highlighted the necessity of complying with statutory mandates and principles of natural justice in assessment proceedings under the Income Tax Act, 1961.