2023 (6) TMI 935 - HC - Income Tax

Reopening of assessment - act of giving only 12 hours to file reply to the show cause notice by the respondents - violation of the principles of natural justice - Respondents have failed to grant adequate opportunity of hearing/ an opportunity to defend was not given to the petitioner assessee - HELD THAT - As gone through the reply dated 29.03.2022 submitted by the petitioner, copy of which is placed on record at page 82 of the compilation. A specific request was made by the petitioner to the respondent that particular documents/details be supplied for cross verification and an opportunity to crossexamine one Mr. Saurabh Kathwadia be given to the petitioner. However, it is not in dispute that the said documents as asked for by the petitioner were not supplied to him nor any opportunity of cross-examination of the aforesaid person was granted to the petitioner. Even otherwise, within less than 12 hours, it is difficult for the petitioner to submit complete reply to the respondents. When the show cause notice-cum-draft assessment order is issued to the petitioner, reasonable/adequate opportunity was required to be given to him. In the present case, adequate opportunity was not given to the petitioner and therefore only on this ground the petition deserves to be allowed. WP allowed. Decided in favour of assessee.

Summary

Issues Involved:
1. Violation of principles of natural justice.
2. Adequate opportunity of hearing.
3. Alternative efficacious remedy.

Summary:

Violation of principles of natural justice:
The petitioner argued that the act of giving only 12 hours to file a reply to the show cause notice by the respondents is in clear violation of the principles of natural justice. The petitioner hurriedly filed a part submission and requested an opportunity for a hearing through video conference, which was provided. However, the petitioner was not granted the opportunity to cross-examine Mr. Saurabh Kathwadia, whose statement was crucial to the case. The court noted that the respondents failed to provide the documents requested by the petitioner for cross-verification, thus violating the principles of natural justice.

Adequate opportunity of hearing:
The petitioner contended that the respondents did not grant adequate opportunity of hearing. Despite submitting a reply to the show cause notice-cum-draft assessment order within the given 12 hours, the petitioner requested certain documents and the opportunity to cross-examine a key individual, which were not provided. The court emphasized that reasonable and adequate opportunity was required to be given, and the failure to do so warranted the quashing of the impugned order.

Alternative efficacious remedy:
The respondent's counsel argued that the petitioner had an alternative efficacious remedy to file an appeal before the Appellate Authority. However, the court found that the lack of adequate opportunity of hearing and the violation of natural justice principles justified the court's intervention without directing the petitioner to the alternative remedy.

Conclusion:
The court allowed the petition, quashing and setting aside the impugned assessment order dated 31.03.2022. It clarified that this decision does not preclude the respondent from initiating any action from the stage it was left, provided the petitioner cooperates. The court did not examine the merits of the petitioner's case.