2021 (5) TMI 770 - HC - Income Tax

Assessment order u/s 143(3) r.w.s.144B - a notice under Section 143(2) was issued followed by several notices under Section 142 (1) - a request for accommodation was made by the petitioner on 27.04.2021, wherein a reference was made to the CBDT circular dated 24.04.2021, whereby, the limitation for passing the assessment order had been extended till 30.06.2021 - HELD THAT - Once respondent no. 1 issued a show cause notice-cum-draft assessment order calling upon the petitioner to file its objections qua the same, this argument cannot be taken on behalf of respondent no. 1 in view of the fact that the impugned show cause notice-cum-draft assessment order dated 22.04.2021 has brought about a variation in the returned income of the petitioner. Therefore, for the foregoing reasons, we are inclined to allow the writ petition. It is ordered accordingly. The impugned assessment order, the notice of demand and the notice for initiation of penalty proceedings, are quashed. Liberty is, however, granted to respondent no. 1 to pass a fresh assessment order after giving an opportunity of a personal hearing to the authorised representative of the petitioner, qua the show cause notice-cum-draft assessment dated 22.04.2021. While granting the personal hearing, the respondent no. 1 will inter alia bear in mind the provisions of Clauses (vii) to (xii) of Section 144B (7) of the Act. Respondent no. 1 will, thus, serve upon the petitioner, a written notice indicating therein, the date and time as to when the hearing will be convened, albeit via virtual mode, given the fact that the pandemic is raging in Delhi.

Summary

Issues Involved:
1. Granting exemption from court-fee and affidavit filing
2. Exercise of jurisdiction by the court
3. Challenge against assessment order, demand notice, and penalty proceedings
4. Breach of principles of natural justice in passing the assessment order
5. Opportunity for personal hearing and fresh assessment order

Issue 1: Granting exemption from court-fee and affidavit filing
In the case, the court allowed the petitioner's application for exemption from filing requisite court-fee and sworn/notarised/affirmed affidavit(s) along with the writ petition, subject to the petitioner depositing the necessary court-fee and filing the required affidavits within three days of the court's normal work pattern resuming.

Issue 2: Exercise of jurisdiction by the court
The court accepted jurisdiction in the matter concerning an assessment order under the Income Tax Act, emphasizing the need to save time and expenses for both the revenue and the assessee. The court acknowledged the jurisdiction in the case, highlighting the importance of concluding the matter to provide certainty for the parties involved.

Issue 3: Challenge against assessment order, demand notice, and penalty proceedings
The writ petition challenged an assessment order, a demand notice, and a notice for penalty proceedings issued under the Income Tax Act for the assessment year 2018-2019. The petitioner raised objections regarding the assessment order dated 30.04.2021, demand notice, and initiation of penalty proceedings issued on the same date.

Issue 4: Breach of principles of natural justice in passing the assessment order
The petitioner contended that the assessment order was passed in breach of natural justice principles as the petitioner's request for a personal hearing was not granted, despite the CBDT extending the deadline for passing the assessment order. The court found merit in the petitioner's argument and concluded that the order was passed unreasonably without accommodating the petitioner's request.

Issue 5: Opportunity for personal hearing and fresh assessment order
Due to the breach of natural justice, the court quashed the assessment order, demand notice, and penalty proceedings. The court granted liberty to the respondent to pass a fresh assessment order after providing an opportunity for a personal hearing to the petitioner's authorized representative. The court directed the respondent to follow specific provisions of the Income Tax Act during the hearing and to conduct the proceedings virtually due to the ongoing pandemic. Additionally, the petitioner was instructed to file objections within seven days of receiving the court's order to expedite the process.

In conclusion, the court allowed the writ petition, quashed the impugned orders, and provided directions for a fair and just assessment process, ensuring compliance with natural justice principles and procedural requirements under the Income Tax Act.