Assessment Order issued without taking into consideration reply filed by the Assessee is not valid

[CA Bimal Jain]

The Hon’ble Delhi High Court in the case of Emco Cables Pvt. Ltd. v. Union of India [2024 (3) TMI 57 - DELHI HIGH COURT] disposed of the writ petition, thereby holding that, the reply filed by the Assessee should be taken into consideration at the time of passing the Assessment Order and in case where proper reply/explanation has not been filed and when further details are required, the Revenue Department is obliged to seek the relevant documents/details.

Facts:

The Revenue Department (“the Respondent”) issued the Show Cause Notice dated September 24, 2023 (“the SCN”), against Emco Cables Pvt. Ltd. (“the Petitioner”) wherein it was alleged that the Petitioner has under-declared output tax, claimed excess Input Tax Credit (“ITC”) and claimed ITC from cancelled dealers and non-taxpayers for which detailed reply was filed by the Petitioner. However, the Respondent vide order dated December 29, 2023 (“the Impugned Order”) recorded that, the reply filed by the Petitioner is not satisfactory and directed that DRC-07 should be issued in the present case.

Aggrieved by the Impugned order, the Petitioner filed a writ petition contending that the Petitioner has filed a detailed reply. 

Issue:

Whether the Assessment Order issued without taking into consideration the reply filed by the Assessee is valid?

Held:

The Hon’ble Delhi High Court in the case of 2024 (3) TMI 57 - DELHI HIGH COURT held as under:

• Noted that, the Proper Officer was required to consider the reply on merits and thereafter form an opinion on whether the reply filed by the Petitioner was sufficient or not.
• Further Noted that, even if the Proper Officer was of the view that the reply filed by the Petitioner is incomplete and further details were required, the said details could have been sought from the Petitioner. However, as per the records no such opportunity was granted to the Petitioner.
• Opined that, the Proper Officer merely held that, no proper reply/explanation was received which ex-facie shows that, the Proper Officer of the Respondent has not perused the reply submitted by the Petitioner.
• Held that, the Impugned Order is set aside and the matter is remitted back to the Proper Officer for re-adjudication.

(Author can be reached at [email protected])