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2021 (9) TMI 872 - HC - Income TaxBreach of the principles of natural justice - Glitch in e-filing portal of the Income Tax Department - Demand raised as disallowance under Section 14A and being unexplained loan under Section 68 - As argued assessment order has been passed without taking into consideration the issues faced by the taxpayers with the new e-filing portal of the Income Tax Department and without taking into consideration that the e-portal mentioned the response date was 21st July 2021 - HELD THAT - As respondents themselves have admitted that there was a technical glitch, in our view, it is a fit case to set aside the assessment order and remand the matter for de novo consideration. Accordingly, the assessment order and consequential demand notice dated 8th July 2021 under Section 156 and notice of penalty also dated 8th July 2021 issued under Section 271(1)(c) of the Act are set aside and remanded for de novo consideration.
Issues: Impugning assessment order on grounds of breach of natural justice due to technical glitches on new income tax portal.
The petitioner challenged an assessment order dated 8th July 2021, alleging it was passed in violation of natural justice principles. The petitioner accessed its e-proceedings folder on the new income tax portal on 5th July 2021, discovering a show cause notice dated 10th June 2021 under Section 142(1) had been issued. Despite the portal indicating a response due date of 21st July 2021, the assessment order was unexpectedly passed on 8th July 2021. The order included additions under Sections 14A and 68 of the Income Tax Act, along with a substantial demand. The petitioner contended that the order disregarded the portal issues faced by taxpayers and the response deadline of 21st July 2021, further highlighting the lack of a personal hearing. In response, the affidavit stated that a final show cause notice was issued on 10th June 2021 with a hearing date of 14th June 2021, but due to a technical glitch attributed to system upgrades by the DGIT (System) CBDT, the order was passed prematurely on 8th July 2021. Acknowledging the technical issues, the respondents admitted to passing the order before the response deadline due to their unawareness of the correct date displayed on the portal. The Court, considering the admitted technical glitch, deemed it appropriate to set aside the assessment order and remand the matter for fresh consideration. Consequently, the assessment order, demand notice under Section 156, and penalty notice under Section 271(1)(c) issued on 8th July 2021 were all annulled and remanded for reconsideration. The petitioner was granted a two-week window to file a response, with a warning that failure to do so would allow the respondents to proceed based on existing records. Additionally, the respondents were directed to provide a personal hearing upon the petitioner's request and to ensure the assessment order complies with the law. The judgment clarified that no observations were made on the case's merits, and the petition was disposed of without any costs being imposed.
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