2022 (12) TMI 1024 - HC - Income Tax

Validity of assessment order - undue haste and failure to give adequate opportunity to the appellant to put forth its submission - HELD THAT - As we find that the assessment had been completed by the officer with utmost haste without affording a reasonable opportunity for the appellant to put forth its contentions especially when the allegation was one of mismatch . The undisputed facts are that show cause notice was issued on 14th September 2022 at 6.31 p.m. communicated to the appellant / assessee via email. The show cause notice is an elaborate show cause notice running to more than 18 pages. In the penultimate page it has been stated that the appellant / assessee has to give his response through online mode by 17.29 hours on 19th September 2022. At first blush it appears that the appellant / assessee has five days time to respond but however when we look at the calendar we find that the time granted was only two days as we have to exclude 14th September 2022 the date of issuance of show cause notice and 17 th September 2022 and 18th September 2022 have to be excluded as they are being Saturday and Sunday and especially on 17 th September 2022 it was an auspicious day where pujas were being celebrated through the State of West Bengal. This would be sufficient for us to set aside the assessment order on the ground of undue haste and failure to give adequate opportunity to the appellant to put forth its submission. The interim reply given by the appellant / assessee has been verbatim extracted in the order and the assessing officer states that the reply of the assessee is not found acceptable. In paragraph 4.5.3 of the assessment order the assessing officer says that the show cause notice was served on 14th September 2022 and five days were given to the assessee to submit its reply. As pointed out earlier the assessee had not been given 5 days time and effectively they had only 48 hours to submit its reply. With regard to the details regarding the GSTR-1 returns of the other parties is concerned the assessing officer would state that the portal was kept open. There was nothing on record to indicate that the assessee was put on notice that the portal was kept open and it could do verification so as to reconcile any discrepancy. Thus we are fully satisfied that there is total violation of principles of natural justice which would be a good ground to interfere with the assessment order despite an appellate remedy existing over such an order. Appeal is allowed and the order passed in the writ petition is set aside.

Summary

Issues: Challenge to assessment order under Income Tax Act, 1961 based on undue haste and lack of opportunity for appellant to present contentions.

Analysis:
1. Issue: Challenge to assessment order under Income Tax Act, 1961.
- The appeal was filed against an assessment order dated 28th September, 2022 under Section 143(3) read with Section 144B of the Income Tax Act, 1961.
- The Single Bench dismissed the writ petition, stating the appellant should use the appellate remedy under the Act.
- The appellant appealed against this order, citing undue haste in assessment without proper opportunity for defense.

2. Analysis: Lack of adequate opportunity for the appellant.
- The assessment was completed hastily without allowing sufficient time for the appellant to respond.
- The show cause notice was issued on 14th September, 2022, with a response deadline of 19th September, 2022, effectively giving only two days for a detailed reply.
- The appellant highlighted the voluminous nature of the case and requested more time, especially to access GSTR-1 data for clarification.

3. Analysis: Violation of principles of natural justice.
- The assessing officer did not extend the time despite the appellant's request for more time to provide a comprehensive response.
- The assessment order verbatim included the appellant's interim reply but deemed it unacceptable without proper consideration.
- The assessing officer failed to notify the appellant about the availability of the portal for reconciliation, leading to a violation of natural justice principles.

4. Analysis: Court's decision and remedy.
- The Court found the assessment order was flawed due to undue haste and lack of opportunity for the appellant.
- The appeal was allowed, setting aside the order and remanding the matter back to the assessing officer for fresh consideration.
- The assessing officer was directed to provide necessary documents requested by the appellant and grant sufficient time for reconciliation before passing a final order based on merits and law compliance.
- No costs were awarded, and parties were instructed to receive certified copies promptly upon request.

This judgment highlights the importance of affording parties adequate time and opportunity to present their case in tax assessments, emphasizing the principles of natural justice and fairness in administrative proceedings under the Income Tax Act, 1961.