2023 (12) TMI 1093 - HC - Income Tax

Validity of assessment order passed w/o affording fair opportunities to the petitioner to put forth their contentions - denial of principles of natural justice - main grievance expressed by the petitioner is that no fair opportunity of hearing was granted to the petitioner before passing the impugned order and the opportunity that was granted to the petitioner cannot be deemed to be fair opportunity, since within a short span of time - HELD THAT - As respondent-Department has concluded the assessment proceedings hurriedly inasmuch as, the show cause notice itself was issued only on 27.03.2022 and within two days the petitioner was called upon to file their reply on 29.03.2022 and immediately on the very next day, i.e. on 30.03.2022 at 3.30. p.m the petitioner was asked to appear for hearing through video conference within one hour, i.e. at 4.30 p.m. and on the very same day, the impugned assessment order has been passed. Therefore, impugned order suffers from violation of principles of natural justice. As decided in M/s. Gemini Film Circuit Vs. Additional/Joint/Deputy/Assistant Commissioner of Income Tax. 2023 (10) TMI 1040 - MADRAS HIGH COURT provision of fair opportunity of hearing, held that minimum of 21 days has to be granted to an assessee to enable him to file reply in an effective manner, and the opportunity granted to the assessee should be nominal in nature and should not be an empty formality. This Court is inclined to set aside the impugned order passed by the respondent, since, in the present case, opportunity that was granted to the petitioner was not realistic in nature rather appears to be a nominal one and further, the petitioner has been deprived away of their rights to appear in person to put forth their contention as the petitioner was heard only through video conferencing, which lasted only for five to six minutes and thereafter, the Portal was closed and within a short span of time, no assessee can be expected to put forth their contention in an effective manner. Therefore, this Court holds that the impugned order is in gross violation of principles of natural justice and liable to be aside. Writ Petition is allowed, the impugned order is set aside and the matter is remanded back to the first respondent for re-consideration, in which case, the respondent is directed to provide an opportunity of personal hearing to the petitioner, which can be fixed by the respondent at any date granting 15 days' time after the receipt of a copy of this order

Summary

Issues:
The issues involved in this case are the challenge to the notice issued by the Income Tax Department under Section 148 for reopening the assessment for AY 2015-16 and the subsequent assessment order.

Facts of the Case:
The petitioner, a Private Limited Company engaged in marketing consumer products, filed returns for AY 2015-16. The Assessing Officer sought details through notices and passed an assessment order disallowing certain claims. Subsequently, the petitioner received a notice under Section 148 for reopening the assessment, leading to a series of requests for information and notices from the respondent. The petitioner provided the requested documents, but the respondent issued a show cause notice and passed the assessment order without proper examination of the submissions.

Petitioner's Argument:
The petitioner's counsel argued that the petitioner was not given a fair opportunity to present their case before the assessment order was passed. The short timeline provided for responses and the brief video conferencing session did not constitute a real opportunity for the petitioner to be heard. Citing a previous court decision, the counsel emphasized the need for a minimum of 21 days for the assessee to respond effectively.

Respondent's Response:
The respondent's counsel contended that the petitioner was given fair opportunities to present their contentions before the assessment order was passed. The respondent maintained that the assessment proceedings were conducted in accordance with the law and there was no violation of natural justice principles.

Court's Decision:
The Court noted that the petitioner was not afforded a realistic opportunity to be heard before the assessment order was passed. Referring to a recent decision, the Court emphasized the importance of granting a minimum of 21 days for the assessee to respond effectively. Consequently, the Court set aside the impugned order, remanding the matter back to the respondent for reconsideration with directions to provide a proper opportunity for personal hearing. All consequential proceedings initiated based on the impugned order were also set aside. No costs were awarded in the matter.