Opportunity to contest tax demand should not be denied due to negligent conduct of Accountant

[CA Bimal Jain]

The Hon’ble Madras High Court in STEM INFRASTRUCTURE VERSUS ASSISTANT COMMISSIONER, (ST) , CHENNAI - 2024 (8) TMI 1130 - MADRAS HIGH COURT, set aside the assessment order and granted opportunity to contest tax demand wherein the assessee could not file the reply due to negligent conduct of the accountant as the assessee was not informed about the proceedings initiated by the revenue department.

Facts:

Stem Infrastructure (“the Petitioner”), filed a writ petition against order dated December 18, 2023 (“the Impugned Order”) wherein the Revenue Department (“the Respondent”) states that the Impugned Order has been passed after sending adequate reminders before the issuance of the Show Cause Notice (“the SCN”). However, the Petitioner contends that they were unaware of proceedings initiated by the Department as the Accountant engaged by the Petitioner did not inform about the aforesaid proceedings.

Issue:

Whether the Petitioner should be denied opportunity to contest tax demand due to negligent conduct of the accountant?

Held:

The Hon’ble Madras High Courtin STEM INFRASTRUCTURE VERSUS ASSISTANT COMMISSIONER, (ST) , CHENNAI - 2024 (8) TMI 1130 - MADRAS HIGH COURT held that as per the aforesaid facts, the proper opportunity should be granted to the Petitioner for contesting the tax demand on merits. Hence, the Impugned Order is set aside subject to the condition that the Petitioner remits 10 per cent of the disputed tax demand. Further, the Court permitted the Petitioner to file the reply to the SCN issued. Further, the Court directed that after receiving of the deposit, reasonable opportunity should be granted such as personal hearing, and thereafter fresh assessment order should be passed.

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