2023 (2) TMI 318 - HC - Income Tax

Validity of assessment - show-cause notice was issued by the Assessing Officer (AO) without taking into account the fact that the petitioner had filed a reply - HELD THAT - Although the petitioner s reply dated 08.12.2022 was on record, a show-cause notice dated 09.12.2022 was issued, without having regard to the reply, we are inclined to quash the impugned notices and order. There was, to our minds, clearly a failure to adhere to the directions contained in Clause N.1.3 of the Standard Operating Procedure (SOP) for Assessment Unit (AU) dated 03.08.2022; which required a minimum timeframe of seven days to be given to the noticee i.e., the petitioner. It is directed accordingly. The impugned notices and order are quashed.

Summary

Issues:
Challenge to notices and assessment order for Assessment Year 2021-2022.

Analysis:
The writ petition challenged notices and an assessment order for Assessment Year 2021-2022. The petitioner filed a return for the said year on 15.03.2022, which was selected for scrutiny under the Computer Assisted Scrutiny Selection (CASS) scheme. Notices were issued under Section 143(2) and Section 142(1) of the Income Tax Act, with the petitioner responding to these notices. However, a show-cause notice was issued on 09.12.2022 without considering the petitioner's earlier reply. The petitioner attempted to respond but faced technical difficulties due to the e-proceedings window being closed. Despite multiple email communications, the issue was not resolved. The court noted a failure to adhere to the Standard Operating Procedure (SOP) for Assessment Unit (AU) which required a minimum timeframe of seven days for the noticee. Consequently, the court quashed the impugned notices and order, directing a de novo exercise to be carried out by the Assessing Officer (AO) in accordance with the law. The SOP was framed in line with the provisions of the Income Tax Act.

This judgment highlights the importance of procedural adherence in tax assessments and the need for proper communication channels between taxpayers and tax authorities. It also emphasizes the significance of providing adequate time for noticees to respond and the consequences of failing to follow established procedures. The court's decision to quash the notices and order while allowing a fresh assessment underscores the principles of fairness and due process in tax administration.