2022 (4) TMI 1332 - HC - Income Tax

Assessment u/s 153A - Addition primarily on the ground that the petitioner had failed to file reply to the show cause notice issued by the respondent No.1 on 22 nd March, 2022 around midnight - HELD THAT - This Court is of the view that time of one and a half days given by the respondent-Revenue to the petitioner to respond to the notice dated 22nd March, 2022 in the peculiar facts of the present case was not sufficient. It is pertinent to mention that the show cause notice dated 22nd March 2022 runs into 92 pages and is accompanied by the deposition of certain individuals which were not provided to the petitioner prior thereto. Consequently, in the peculiar facts of the present case, the impugned assessment order dated 31st March 2022 is set aside. Petitioner is directed to file its response to the show cause notice dated 22nd March 2022 within three weeks. Respondent is directed to pass an assessment order within four weeks thereafter by way of a reasoned order in accordance with law.

Summary

Issues:
Challenging Assessment Order under Income Tax Act for AY 2020-21.

Analysis:
1. The writ petition challenged the Assessment Order dated 31st March, 2022, under Section 143(3) read with Section 153A of the Income Tax Act, 1961 for the Assessment Year 2020-21.

2. The petitioner contested the additions totaling to ?100,89,12,380 made by respondent No.1 due to the failure to reply to a show cause notice issued on 22nd March, 2022, which was served via email with a short response deadline.

3. The petitioner argued that the show cause notice, comprising 92 pages, requested documents for the first time during the assessment proceedings, which were not previously asked for in four earlier notices under Section 142(1) that were duly responded to.

4. The Revenue's counsel contended that adequate opportunities were provided to respond to the notices issued, with the last notice sent due to the petitioner's inadequate responses to prior notices under Section 142(1).

5. Despite receiving the notice on 22nd March, 2022, the petitioner neither replied nor requested additional time according to the Revenue's counsel.

6. The petitioner's counsel stated that the petitioner's representatives visited the respondent's office seeking more time to respond to the notice but were not accommodated.

7. Disputing the petitioner's claim, the Revenue's counsel contested the petitioner's version of events.

8. The Court found the time given to respond to the notice inadequate, considering its length and the accompanying depositions not previously provided to the petitioner, leading to setting aside the assessment order dated 31st March, 2022.

9. Consequently, the petitioner was directed to respond to the show cause notice within three weeks, and the respondent was instructed to pass a reasoned assessment order within four weeks thereafter, maintaining the legal requirements.

10. The writ petition and pending application were disposed of, clarifying that the Court did not comment on the merits of the dispute, leaving the rights and contentions of all parties open for further proceedings.