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2025 (1) TMI 1410 - HC - Income TaxValidity of assessment order issued u/s 143(3) r.w.s. 144B - violation of principles of natural justice - petitioner contends that the assessment was conducted without proper consideration of the evidence and that the video conferencing hearing was ineffective. HELD THAT - A perusal of the order impugned would indicate that the petitioner had been given a show cause notice for which it had replied and a hearing through video conferencing had also taken place. Whether the video conferencing was an empty formality? - As rightly pointed out by respondents the petitioner in the affidavit had clearly averred that it and its authorized representative had appeared through video conferencing and had explained in detail the way in which the loans were taken and repaid. This itself would mean that the said video conferencing was not an empty formality. When a show cause notice had been issued on certain allegations it is the duty of the recipient of such show cause notice to assail the same by producing relevant and necessary documents. In the present case the petitioner had not produced such relevant and necessary documents. The petitioner cannot expect the first respondent to call upon the petitioner to produce further documents as the first respondent will not be aware of what are the documents available with the petitioner to substantiate the same. Hence no violation of principles of natural justice as alleged by the petitioner proved. WP dismissed.
ISSUES PRESENTED and CONSIDERED
The primary issue considered in this judgment is whether the assessment order issued under Section 143(3) read with Section 144B of the Income Tax Act, 1961, violates the principles of natural justice. The petitioner contends that the assessment was conducted without proper consideration of the evidence and that the video conferencing hearing was ineffective. The respondent argues that the petitioner had adequate opportunity to present their case and that the assessment order is appealable. ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents The legal framework involves Sections 143(3) and 144B of the Income Tax Act, which govern the assessment procedures and the issuance of show cause notices. The principles of natural justice require that parties be given a fair opportunity to present their case. The Court referenced the precedent set by the Supreme Court in Assistant Commissioner of State Tax and others Vs. Commercial Steel Limited, which outlines the criteria for entertaining writ petitions in the context of alleged violations of natural justice. Court's Interpretation and Reasoning The Court interpreted the procedural requirements under the Income Tax Act and the principles of natural justice. It noted that the petitioner had been issued a show cause notice and had responded with a detailed reply. Additionally, a video conferencing session was conducted, during which the petitioner had the opportunity to explain the transactions in question. Key Evidence and Findings The petitioner argued that the assessment was made without requesting further documents and that the video conferencing was ineffective. However, the Court found that the petitioner had acknowledged attending the video conferencing and explaining the transactions. The Court determined that the petitioner had not provided additional documents to substantiate their claims during the assessment process. Application of Law to Facts The Court applied the principles of natural justice and the procedural requirements of the Income Tax Act to the facts of the case. It concluded that the petitioner was given an adequate opportunity to present their case through the show cause notice and the video conferencing session. The Court found no evidence of procedural unfairness or a violation of natural justice. Treatment of Competing Arguments The petitioner argued that the assessment was procedurally flawed due to the lack of a request for further documents and the ineffective video conferencing. The respondent countered that the petitioner had an adequate opportunity to present their case and that the assessment order is appealable. The Court sided with the respondent, emphasizing the petitioner's responsibility to provide necessary documents and the availability of an appellate remedy. Conclusions The Court concluded that there was no violation of the principles of natural justice. It held that the petitioner had been given an adequate opportunity to present their case and that the assessment order was procedurally sound. The Court dismissed the writ petition, allowing the petitioner to pursue an appeal with the appropriate appellate authority. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning The Court stated, "When a show cause notice had been issued on certain allegations, it is the duty of the recipient of such show cause notice to assail the same by producing relevant and necessary documents." Core Principles Established The judgment reinforces the principle that recipients of a show cause notice must actively provide relevant documents to support their case. It also underscores the importance of utilizing available appellate remedies before seeking judicial intervention. Final Determinations on Each Issue The Court determined that there was no violation of natural justice in the assessment process. The petitioner was found to have had sufficient opportunity to present their case, and the writ petition was dismissed. The petitioner was advised to file an appeal with the appropriate authority, and the period of pendency of the writ petition would be excluded from the limitation period for filing such an appeal.
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