2023 (1) TMI 776 - HC - Income Tax

Assessment u/s 144B - adjournment application - Non communication of next date to the petitioner - As argued no effective opportunity had been given to furnish the documents and to reply to the show cause notice and draft assessment order - non response to the request of grant of 20 days or permitting filing of reply to the show cause notice - HELD THAT - As in response to the request made by the assessee, nothing had been responded to in the National Faceless Assessment procedure. This is true, it has been brought into the effect for doing the things that makes the system very transparent. It has numerous advantages and at the same time, the authority is also required to be far more vigilant in responding to the request online here. The order sheet of the officer concerned shows that he has granted the time up to 10/05/2021 but, the same was never communicated to the petitioner. Although, he may not have intended that way, but due to either limitation of the system itself or operationalization of the system, on the part of the officer concerned, unquestionably this has happened. The fact remains that the assessee would be totally in dark of the next date of hearing and therefore, if that has resulted into finalization of the assessment against the assessee, there is a clear violation of principles of natural justice and therefore, this Court needs to interfere by quashing and setting aside the order of assessment. Let the opportunity be given to the petitioner. We hereby restore the matter from the stage at which it was. Respondent is directed to give an opportunity to the petitioner by granting time of two weeks to respond to the show cause notice from the date of receipt of copy of this order. Let there be a specific date given of two weeks to the petitioner within which, the petitioner shall file his reply without asking for further adjournment. Thereafter, after following the due procedure, necessary order shall be passed.

Summary

Issues Involved:
1. Non-response to adjournment request and principles of natural justice.
2. Faceless assessment procedure and communication issues.
3. Validity of the assessment order passed on 16/06/2021.

Detailed Analysis:

1. Non-response to Adjournment Request and Principles of Natural Justice:
The petitioner argued that the respondent failed to respond to their request for a 20-day adjournment made on 26/04/2021, which was necessary due to the Covid-19 pandemic. The petitioner claimed that the lack of response left them under the belief that a fresh notice would be issued for the next hearing date. The court found that the respondent did not communicate the adjournment granted until 10/05/2021, resulting in a violation of the principles of natural justice. The court emphasized that the petitioner was left "clueless on the next date of hearing," which necessitated judicial intervention to quash the assessment order.

2. Faceless Assessment Procedure and Communication Issues:
The faceless assessment procedure, aimed at transparency, requires the respondent authority to be vigilant in responding to requests online. The court noted that the order sheet maintained by the respondent showed the adjournment was granted but not communicated to the petitioner. This failure was attributed to either system limitations or operational issues. The court highlighted that the petitioner could not file a reply unless the portal was open, underscoring the need for effective communication in faceless assessments to prevent such procedural lapses.

3. Validity of the Assessment Order Passed on 16/06/2021:
The assessment order dated 16/06/2021 was challenged on the grounds that it was passed without considering the petitioner's adjournment request and without giving them an opportunity to respond to the show cause notice. The respondent contended that they had waited beyond the requested 20 days, until 15/06/2021, before finalizing the assessment. However, the court found that the lack of communication about the adjournment date and the subsequent finalization of the assessment without the petitioner's response constituted a breach of natural justice. Consequently, the court quashed the assessment order and directed the respondent to grant the petitioner two weeks to respond to the show cause notice, ensuring due procedure is followed thereafter.

Conclusion:
The court concluded that the assessment order was passed in violation of the principles of natural justice due to the respondent's failure to communicate the adjournment. The matter was restored to the stage at which the adjournment was requested, and the respondent was directed to provide a specific date for the petitioner to file a reply within two weeks, without further adjournments. The court did not delve into the merits of the case, ensuring that the disposal of the petition would not prejudice either party regarding the substantive issues.