2024 (6) TMI 944 - HC - Income Tax

Validity of assessment order passed u/s 143 (3) r.w.s. 144B on the ground of violation of principles of natural justice - HELD THAT - Admittedly, in this case it is apparent that the show cause notice had been digitally signed on 26th March 2024 at around 18.17.08 hours. As such, the same could not have been served on the petitioners prior to 18.17 hours of 26th March 2024. It would also appear that the petitioner no. 1 was barely provided 24 hours to respond as the response of the petitioner no. 1 was required to reach the respondents by 19.00 hours on 27th March 2024. Admittedly, 25th and 26th March 2024 were holidays on account of holi festival . Petitioners have been able to make out a case that the petitioner no. 1 did not get reasonable opportunity to respond to the show cause. Be that as it may, it is noted that the petitioner no. 1 had filed its response on 30th March 2024, which fact would corroborate from the online acknowledgment issued by the respondents which is at page 26 of the writ petition. Obviously, therefore, the submit response button tab was kept activated for the petitioner no. 1 to file its response. Once such response was on record, in my view, the faceless assessment unit was obliged to consider the same. From the materials on record including the order dated 31st March 2024 it would appear that the faceless assess unit has not considered the response submitted by the petitioner no. 1 by recording that no response had been filed by the petitioner no. 1 within the stipulated time. The aforesaid appears to be a mechanical approach adapted by the faceless assessment unit. In view thereof, the order dated 31st March 2024 passed un/s 143 (3) read with Section 144B of the said Act cannot be sustained and the same is accordingly set aside and quashed. The authority shall dispose of the matter preferably within a period of 6 weeks from the date of communication of this order in the manner as directed hereinabove.

Summary

Issues: Challenge to assessment order u/s 143(3) of the Income Tax Act, 1961 on grounds of violation of natural justice.

Summary:
The petitioners sought to add a co-petitioner and challenged an assessment order dated 31st March 2024 u/s 143(3) of the Income Tax Act, 1961, alleging a violation of natural justice. The petitioner company, a private entity, received a show-cause notice on 26th March 2024, requiring a response by 27th March 2024. Due to a holiday on 26th March, the response was submitted on 30th March 2024. Despite this, the faceless assessment unit did not consider the response, leading to the petitioners claiming a lack of reasonable opportunity to respond.

The Court acknowledged that the show-cause notice was digitally signed on 26th March 2024, after working hours, giving the petitioner only 24 hours to respond. Considering the response submitted on 30th March 2024, the Court held that the assessment unit should have considered it. The Court criticized the mechanical approach of the assessment unit in not acknowledging the response and set aside the assessment order, remanding the matter for a fresh decision with an opportunity for a personal hearing via online video conference.

The Court quashed the order dated 31st March 2024 and directed the faceless assessment unit to reconsider the matter based on the response already submitted by the petitioner, providing an opportunity for a personal hearing within 6 weeks. The writ petition was disposed of with the directive that all parties act based on the official order downloaded from the Court's website.