2021 (6) TMI 589 - HC - Income Tax

Narrow Time frame granted to file reply/objections to the show cause notice-cum-draft assessment order - lockdown situation - HELD THAT - To our minds, this issue attained greater criticality, from the point of view of the petitioner, as his request for accommodation, which was tendered on 26.04.2021, was not dealt with by the AO and the AO proceeded to pass the impugned assessment order on 27.04.2021. AO could have easily accommodated the petitioner, in view of the fact that the limitation for passing the assessment order stood extended by the Central Board of Direct Taxes till 30.06.2021. We are, thus, of the opinion that given the circumstances, which have been adverted to in the writ petition, the impugned assessment order cannot be sustained, as it compromised the petitioner s right to effectively contest the position taken by the respondent/revenue, in its show cause notice-cum-draft assessment order dated 22.04.2021. Accordingly, the impugned assessment order dated 27.04.2021, concerning the assessment year 2018-2019, is set aside. Liberty is, however, given to the AO to take next steps in the matter, albeit, as per law.

Summary

Issues:
1. Breach of principles of natural justice due to narrow timeframe for response to show cause notice.
2. Failure of Assessing Officer to accommodate petitioner's request for adjournment during lockdown.
3. Validity of the impugned assessment order dated 27.04.2021 for assessment year 2018-2019.

Issue 1: Breach of principles of natural justice due to narrow timeframe for response to show cause notice:
The petitioner contended that the assessment order dated 27.04.2021 for assessment year 2018-2019 should be set aside due to a breach of principles of natural justice. The show cause notice-cum-draft assessment order required a response by 26.04.2021, a timeframe deemed narrow considering the lockdown in Delhi since 19.04.2021. The petitioner requested an adjournment due to the inability to access records and the chartered accountant's COVID-19 affliction. Despite the request and the CBDT's extension of the assessment order deadline to 30.06.2021, the Assessing Officer passed the order on 27.04.2021, disregarding the petitioner's circumstances. The Court found a prima facie breach of natural justice, as the petitioner's request was not addressed before passing the order.

Issue 2: Failure of Assessing Officer to accommodate petitioner's request for adjournment during lockdown:
The Court noted that the Assessing Officer failed to accommodate the petitioner's request for adjournment, despite the lockdown situation and the CBDT's extended deadline for assessment orders. The petitioner's circumstances, including the lockdown and the chartered accountant's illness, warranted an extension for filing a response. The failure to consider these factors compromised the petitioner's ability to contest the revenue's position effectively. The Court opined that the AO could have easily accommodated the petitioner given the extended deadline, highlighting the failure to address the adjournment request as a critical oversight leading to the breach of natural justice.

Issue 3: Validity of the impugned assessment order dated 27.04.2021 for assessment year 2018-2019:
The crux of the matter revolved around whether the narrow timeframe for responding to the show cause notice, amid the lockdown and petitioner's circumstances, rendered the impugned assessment order unsustainable. The Court concluded that the circumstances outlined in the writ petition justified setting aside the assessment order as it compromised the petitioner's right to contest effectively. Accordingly, the impugned assessment order for the assessment year 2018-2019 was set aside, granting liberty to the AO to proceed lawfully. The writ petition and pending application were disposed of accordingly, emphasizing the importance of upholding principles of natural justice in administrative proceedings.