2022 (11) TMI 1301 - HC - Income Tax

Assessment u/s 153A - limitation for passing of the aforesaid orders u/s 153A - Period of limitation - HELD THAT - The limitation for passing of the aforesaid orders under Section 153A of the Act, admittedly, expires on 31.03.2023 as the last date of the authorizations is dated 06.07.2021. To be noted that Section 153B provides for a limitation of one year from the end of the financial year in which the last of the authorization was issued for completion of the assessments under Section 153A. As far as the order of assessment challenged is concerned, a regular assessment, limitation for completion of the same expires on 31.03.2023. In light of the apparent violation in compliance with the principles of natural justice, all impugned orders of assessment are set aside. Let the petitioner be heard and orders passed de novo, in accordance with law and in strict adherence to the principles of natural justice and law, within the expiry of limitation. To facilitate the commencement of the proceedings, let the petitioner appear before the authority on Friday, the 18th of November, 2022 at 10.30 a.m. without awaiting any further notice in this regard.

Summary

Issues:

1. Challenge to orders of assessment under the Income Tax Act, 1961
2. Violation of principles of natural justice in issuance of notices and time for reply
3. Compliance with limitation for passing assessment orders under Section 153A and regular assessment

Analysis:

1. The writ petitions challenged orders of assessment passed under Section 153A and Section 143(3) of the Income Tax Act, 1961, following a search and seizure action conducted in the petitioner's premises. The primary contention raised was regarding the violation of principles of natural justice in the issuance of notices and the time granted for replies to show cause notices.

2. The court noted that notices under Section 153A were issued in December 2021, with responses filed by the petitioner in March 2022. However, show cause notices were issued in September 2022, granting only an average of one week for reply, which was deemed inadequate. The matter was listed for further consideration to address the violations of natural justice.

3. Upon further examination, it was revealed that the impugned assessment orders in several writ petitions had been passed within an average of ten days from the date of issuance of show cause notices for assessment years ranging from 2015-16 to 2020-21. The court emphasized the importance of complying with the limitation period under Section 153A, which was set to expire on 31.03.2023, based on the last date of authorizations.

4. In light of the identified violations of natural justice and the need for adherence to legal principles, the court set aside all impugned orders of assessment. The petitioner was directed to be heard afresh, and new orders were to be passed within the prescribed limitation period, ensuring strict adherence to natural justice and legal requirements.

5. To facilitate the recommencement of assessment proceedings, the petitioner was instructed to appear before the authority on a specified date without further notice. Both parties were reminded to conduct themselves appropriately during the assessment process to ensure timely completion within the legal framework. The writ petitions were disposed of accordingly, with no costs imposed, and connected miscellaneous petitions were closed.