2021 (10) TMI 464 - HC - Income Tax

Denial of principles of natural justice - Less time to respond to SCN - respondents gave little over 24 hours to file reply to the show cause notice and went ahead and passed the impugned order - HELD THAT - As assessing officer ought to have stated as to why he gave only one day notice to respond and why notwithstanding the extension of time by a press release dated 24 th April 2021 issued by CBDT extending the time to 30th June 2021, was he in a tearing hurry to pass the assessment order. This assessment order has to be set aside. We hereby set aside the order. Consequential demand notice and penalty notice are also set aside. The matter is remanded for fresh consideration. Petitioner shall file a reply within two weeks after receiving a communication from the assessing officer.

Summary

Issues: Violation of principles of natural justice in assessment order issuance and time limit extension by CBDT for passing assessment order.

In the judgment delivered by the High Court, the petitioner challenged the assessment order dated 25th April 2021, alleging a violation of natural justice principles by the respondents. The petitioner contended that they were given only a little over 24 hours to respond to a show cause notice before the impugned order was passed. The show cause notice, digitally signed on 23rd April 2021 at 5.20 p.m., required a response by 23.59 hours of 24th April 2021. However, on 25th April 2021, the assessment order was issued despite a press release by CBDT extending the time limit for passing orders until 30th June 2021 under the Income Tax Act, 1961. The assessment order claimed that the assessee did not file any reply or objection to the draft assessment order, although the petitioner argued that they were not prevented from doing so at any stage.

The High Court scrutinized the actions of the assessing officer, questioning why only one day's notice was given to respond and why the assessment order was hurriedly passed despite the time extension granted by CBDT. The Court concluded that the assessment order should be set aside, along with the consequential demand notice and penalty notice. The matter was remanded for fresh consideration, directing the petitioner to file a reply within two weeks after receiving communication from the assessing officer. It was specified that the fresh assessment order should be passed by a different officer, not the one who issued the impugned order, within four weeks of receiving the reply. The Court clarified that no observations were made on the case's merits, and the petition was disposed of accordingly.