2022 (9) TMI 983 - HC - Income Tax

Assessment order passed u/s 143(3) r.w.s 254 r.w.s 144B - Assessing Authority has not complied with the said directions and has proceeded to pass the impugned order without considering or appreciating the specific directions issued by the Tribunal, as such, the impugned order deserves to be set aside on this ground alone - HELD THAT - Directions issued by the ITAT while remitting the matter back to the Assessing Authority, it becomes abundantly clear that specific and definite directions were issued to the Assessing Authority to comply before passing the impugned order. However, a perusal of the order will clearly indicate that the said directions have not been complied with by the Assessing Authority as is clear from the impugned order itself. It is also relevant to state that though the Tribunal has directed the Assessing Authority to afford sufficient and adequate opportunity of being heard to the petitioner, the Assessing Authority has granted only a period of two days from 22.09.2021, on which date show-cause notice was issued and called upon the petitioner to furnish his reply on or before 24.09.2021. It is needless to state that a short period of time given by the Assessing Authority to the petitioner to furnish his reply is not only contrary to the directions issued by the ITAT but is also violative of principles of natural justice and the same deserves to be quashed on this ground also. In view of the specific assertion on the part of the petitioner that if one more opportunity is granted, the petitioner would produce additional documents in support of his claim and in consonance with the directions issued by the ITAT while remitting the matter back to the authority, the impugned order deserves to be set aside on this ground also by providing one more opportunity to the petitioner to produce additional materials in terms of the directions issued by the ITAT.

Summary

Issues involved:
Petition seeking writ of Certiorari to quash assessment order, notice of demand, penalty order, and direction to follow Tribunal's directions.

Analysis:
1. Assessment Order and Notice of Demand: The petitioner sought to quash the assessment order and notice of demand issued by Respondent No.1 for the AY 2010-11. The petitioner contended that the Assessing Authority did not comply with specific directions issued by the Tribunal, leading to an unjust order. The petitioner also argued that the short period of two days given to respond to the show-cause notice was inadequate and violated principles of natural justice. The AGA for the respondents argued that the Assessing Authority was justified in passing the order due to the petitioner's failure to produce directed documents. The High Court found that the Assessing Authority did not comply with the Tribunal's directions and violated principles of natural justice by providing insufficient time for response. Consequently, the High Court quashed the assessment order and notice of demand, remitting the matter back to the Assessing Authority for reconsideration in accordance with the law.

2. Penalty Order and Notice of Demand for Penalty: The petitioner also sought to quash the penalty order and notice of demand for penalty issued by Respondent No.1 for the AY 2010-11. The petitioner argued that the Assessing Authority failed to follow the directions issued by the Tribunal and did not allow sufficient time to produce additional documents. The High Court noted the petitioner's assertion that given another opportunity, additional documents could be provided to support the claim. The High Court, in line with the arguments presented, quashed the penalty order and notice of demand for penalty, directing the Assessing Authority to reconsider the matter strictly in conformity with the directions issued by the ITAT in its previous order.

3. Compliance with Tribunal Directions: The High Court emphasized the importance of the Assessing Authority complying with the specific and definite directions issued by the Tribunal. It was noted that the Assessing Authority failed to adhere to the Tribunal's directions, leading to an unjust order. The Court highlighted the need for the Assessing Authority to provide adequate opportunity for the petitioner to be heard and to consider any additional documents that may support the petitioner's claim. The High Court, therefore, set aside the impugned orders and remitted the matter back to the Assessing Authority, stressing the necessity of following the Tribunal's directions in reconsidering the case.

4. Final Decision: In conclusion, the High Court allowed the petition, quashed the assessment order, notice of demand, penalty order, and notice of demand for penalty. The matter was remitted back to the Assessing Authority for fresh consideration in accordance with the law and the directions issued by the ITAT. The petitioner was granted liberty to produce additional documents and pleadings to support the claim before the Assessing Authority.