2023 (1) TMI 1454 - HC - Income Tax

Validity of order of assessment passed u/s 143(3) r.w.s. 144B - non considering the reply submitted by the petitioner to the show-cause notice - HELD THAT -We have no reason to disagree with the arguments so advanced as the reply to the show-cause notice unless and until considered in its entirety would render the opportunity so granted to the petitioner quite illusory. Principles of natural justice would certainly be said to have been violated if a proper consideration was not accorded to the documents and the response in its correct perspective. It goes without saying that in case the documents filed by the petitioner were not legible the petitioner could have been asked to furnish legible copies of the same instead of rushing through the matter for purposes of passing the order impugned. AO might be constrained to pass the orders of assessment keeping in view the period of limitation for passing such orders yet the same cannot be upheld in violation of principles of natural justice writ large on the face of such order of assessment. We set aside the order impugned and all consequent actions based thereupon. AO will pass fresh orders after considering the reply and the documents legible copies whereof would be furnished by the petitioner within one week from today.

Summary

The Bombay High Court, comprising Dhiraj Singh Thakur and Kamal Khata JJ., addressed a petition challenging an assessment order dated September 19, 2022, issued under section 143(3) read with section 144B of the Income-tax Act, 1961. The petitioner, represented by Mihir Naniwadekar and Rohan Deshpande, argued that the assessment order was issued without considering the reply to a show-cause notice dated March 17, 2022. The petitioner submitted a response with 527 documents, some of which were deemed illegible by the Assessing Officer.

The court noted that the Assessing Officer acknowledged the illegibility of pages 11 to 45 and 253 to 516, totaling 299 pages, and failed to consider them. The court agreed with the petitioner that the lack of proper consideration violated the "principles of natural justice," rendering the opportunity to respond "illusory." The court emphasized that the petitioner should have been asked to provide legible copies rather than proceeding with the assessment.

Despite the constraints of the statutory limitation period for passing assessment orders, the court found the order unsustainable due to the violation of natural justice principles. Consequently, the court set aside the impugned assessment order and all actions based on it. The court directed the Assessing Officer to issue a fresh order after considering the reply and legible documents, which the petitioner must submit within one week. The new assessment order should be completed within four months. The writ petition was disposed of accordingly.