2022 (1) TMI 994 - HC - Income Tax

Validity of National faceless assessment proceedings - violation of principles of natural justice - as argued appellant was not granted opportunity of filing reply to the draft assessment order - HELD THAT - The case in hand is that the appellant came to know of the notice for the first time on 11.09.2021 at 14.19 hours and received the same by speed post but the appellant s accountant entered the online portal to submit reply to the show cause notice dated 23.08.2021 and other notices which were enclosed and by that time the appellant found that the second respondent had passed the assessment order dated 08.09.2021 and raised demand by imposing penalty. The facts appeared to be not in dispute that the Department may contend that earlier notices were issued. The fact remains that having granted a final opportunity of fixing a time limit, the time limit should commence to run from the date of the receipt of the notice and if that be so, the date should be computed from 11.09.2021 and it will expire on 17.09.2021. Therefore, completing the assessment well before the said time is not sustainable and it is in violation of principles of natural justice. The decision in the case of Renew Power (P) Ltd. vs. National E-Assessment Centre Delhi 2021 (5) TMI 810 - DELHI HIGH COURT would also support the case of the appellant. Thus, for the above reasons, the instant appeal is allowed and the connected application is disposed of. Consequently, the writ petition is allowed and the assessment order dated 08.09.2021 and the notice of the demand dated 08.09.2021 as well as the penalty notice dated 08.09.2021 are quashed and the matter is remanded to the respondents for granting fresh opportunity to the appellant for filing reply/objection to the draft assessment notice.

Summary

Issues:
Challenge to faceless assessment proceedings based on violation of principles of natural justice.

Analysis:
The appeal was filed against an order challenging faceless assessment proceedings due to alleged violation of natural justice principles. The appellant sought cancellation of the assessment order, notice of demand, and penalty imposition. The appellant received a notice stating non-receipt of response to certain notices, granting seven days to reply. However, the appellant discovered the assessment order and penalty imposition had already been made before the deadline, leading to a dispute regarding the computation of time limits and violation of natural justice principles. The court considered the appellant's arguments and cited a relevant case to support the appellant's position.

The court allowed the appeal and disposed of the connected application. The writ petition was allowed, quashing the assessment order, notice of demand, and penalty notice. The matter was remanded to the respondents for granting a fresh opportunity to the appellant to file a reply or objection to the draft assessment notice. The court directed the respondents to make a decision on the merit after the appellant availed of the fresh opportunity.