2020 (9) TMI 1131 - HC - Income Tax

Violation of principles of natural justice - petitioner did not appear for the hearing on 11.011.2019, as scheduled - As per petitioner all prior notices and communications have been received by e-mail, this show cause notice was only uploaded on the website and thus had not come to its attention - HELD THAT - There is no serious dispute to the position that the show cause notice dated 06.11.2019 has only been uploaded and not served by e-mail. Petitioner has not been granted an effective opportunity to state its case before the AO - it is only at the stage of show cause notice that the issue to be decided in assessment is crystallised and communicated to the assessee and it is thus incumbent upon the Officer to have ensured that such notice was properly served and sufficient time granted to the assesse to respond prior to finalisation of assessment. Impugned order of assessment dated 19.11.2019 is set aside. The petitioner will appear before the Assessing Officer on Friday, the 18th of September, 2020, without expecting any further notice in this regard, armed with a reply to the show cause notice.

Summary

Issues involved: Violation of principles of natural justice in an income tax assessment order for the assessment year 2014-15.

Analysis:

The petitioner challenged an assessment order dated 19.11.2019 under the Income Tax Act, 1961 for the assessment year 2014-15. The main contention raised was the violation of principles of natural justice due to the show cause notice dated 06.11.2019 not being served by e-mail, leading to the petitioner not appearing for the scheduled hearing on 11.11.2019. The Assessing Officer proceeded to pass the impugned order without the petitioner's participation, based on this non-appearance.

The court acknowledged that the show cause notice was only uploaded and not served by e-mail, which deprived the petitioner of an effective opportunity to present its case before the Assessing Officer. The court emphasized that the show cause notice stage is crucial as it crystallizes and communicates the issue to be decided in the assessment to the assessee. Therefore, proper service of such notice and granting sufficient time for response are essential before finalizing the assessment.

Considering the above, the court set aside the impugned assessment order dated 19.11.2019. The petitioner was directed to appear before the Assessing Officer on a specified date without expecting further notice, equipped with a reply to the show cause notice. The court mandated the completion of assessment within six weeks after considering the petitioner's reply and any additional materials provided.

In conclusion, the writ petition was disposed of with the above directions, and the connected miscellaneous petition was closed without imposing any costs.