2023 (11) TMI 342 - HC - Income Tax

Validity of assessment order - only three working days were given to respond to the draft assessment order - short adjournment and personal hearing through video conferencing, which was not given - HELD THAT - As three working days were given to respond to the draft assessment order, petitioner should be given liberty to file a supplementary response to the draft assessment order. Petitioner is justified in making this request. Petitioner may, therefore, file a supplementary response to the draft assessment order on or before 16th October 2023. The time to file supplementary response will start upon the Assessing Officer providing copies of the notices issued under Section 133(6) of the Act to various parties and responses received from those parties. AO shall also make a statement in the forwarding letter that apart from those responses made available to petitioner, no other party has responded. The assessment order to be passed shall be a reasoned order dealing with every submission of petitioner. The assessment order to be passed by 31st December 2023.

Issues involved: Delay in responding to notice under Section 142(1) of the Income Tax Act, 1961 and lack of personal hearing before passing the assessment order.

Issue 1: Delay in responding to notice under Section 142(1) of the Income Tax Act, 1961
The petitioner alleged that despite responding to the notice under Section 142(1) on two occasions in March 2021, the 2nd respondent did not take any steps for six months until September 2021. The petitioner then submitted voluminous documentary evidence in response to a notice dated 3rd September 2021, but was only given three working days to respond to the draft assessment order. The petitioner requested a short adjournment and personal hearing through video conferencing, which was not granted. The court noted that the 2nd respondent's inaction for six months and the lack of adequate time for response were condemnable. The court emphasized the importance of officers working diligently and sensitively towards assessees to uphold principles of natural justice.

Issue 2: Lack of personal hearing before passing the assessment order
The court expressed disappointment over the 2nd respondent's failure to provide a personal hearing before passing the assessment order, citing lack of time as the reason. The court criticized the Union of India for this stance and emphasized the need for officers to be more considerate towards assessees. The court highlighted the importance of adhering to principles of natural justice and suggested imposing substantial costs on Assessing Officers who fail to meet these standards. The court quashed the assessment order dated 29th September 2021 and remanded the matter to the Jurisdictional Assessing Officer (JAO) for a fresh assessment order in accordance with the directions given by ITAT, with a mandate to provide a personal hearing to the petitioner with advance notice.

Final Decision
The court allowed the petitioner to file a supplementary response to the draft assessment order by 16th October 2023, considering the inadequate time initially provided for response. It was directed that the assessment order to be passed should be a reasoned one, addressing every submission made by the petitioner, and should be completed by 31st December 2023. The court clarified that no observation was made on the merits of the matter, and the petition was disposed of accordingly.

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