2024 (1) TMI 1193 - HC - Income Tax

Validity of reassessment proceedings - Request adjournment date for submission of the response to the show cause notice - violation of the principles of natural justice - petitioner requested for adjournment to 17.3.2023 and the web portal of the Income Tax Department would suggest that the said request was considered, but no date was given for filing the response - petitioner was of the opinion that the petitioner had been granted time up to 17.3.2023 to give response to the notice , however, before 17.3.2023, the assessment order got finalised - HELD THAT - As in agreement with the petitioner that in the absence of date mentioned for submission of the response to the show cause notice dated 23.2.2023, the petitioner had bona fide believed that the petitioner's request for adjournment to 17.3.2023 to give response to the show cause notice dated 23.2.2023 was accepted. However, before 17.3.2023, the impugned order, Ext. P6, has been passed on 14.3.2023, and therefore, there was violation of the principles of natural justice. For that reason, the impugned order is bad in law and is liable to be set aside. Present writ petition is allowed and the impugned order is set aside and the matter is remanded back to open the link provided to the petitioner for uploading the response to the show cause notice dated 23.2.2023. If the petitioner fails to upload the response within the time prescribed for the same, the assessing authority would be free to pass fresh order.

Summary

Issues:
The judgment involves the violation of principles of natural justice in an income tax assessment case.

Summary:
1. The petitioner, an assessee under the Income Tax Act, did not file its return of income for the assessment year 2018-19. The petitioner deposited cash and withdrew cash in the relevant financial year. The petitioner was issued a notice under Section 148 of the Act to explain the cash deposit, but before the deadline for response, the assessment order was finalized. The petitioner argued a violation of natural justice principles as they believed they had until a later date to respond. The court agreed that the absence of a specified response deadline led to a genuine misunderstanding, thus setting aside the order for a fresh opportunity for response and assessment.

2. The Senior Standing Counsel for the Income Tax Department did not dispute the lack of a specified adjournment date for the petitioner's response to the notice. The status of the request for adjournment did not indicate acceptance or rejection, causing confusion regarding the deadline for response.

3. The court concurred with the petitioner's contention that the absence of a specified response deadline created a reasonable belief that the adjournment request was accepted until a later date. Since the order was passed before this assumed deadline, the court found a violation of natural justice principles, leading to the order being deemed invalid and set aside.

4. Consequently, the writ petition was allowed, the impugned order was set aside, and the matter was remanded for the petitioner to upload a response to the notice. Failure to upload the response within the prescribed time would allow for a fresh order. However, if the response is uploaded upon receiving the link, the assessing authority will consider it and provide an online hearing before finalizing the assessment. The writ petition was disposed of with these directions, and any pending applications were dismissed.