2023 (10) TMI 919 - HC - Income Tax

Validity of assessment u/s 144B - violation of principles of natural justice - HELD THAT - Prima facie, there are indications that the petitioner's reply dated 19.09.2022 has not been considered while passing the impugned order. Petitioner had also successfully made a request for video conferencing on 19.09.2022. However, the impugned order has been passed with two days thereafter i.e., on 21.09.2022. Thus, there is a clear violation of principles of natural justice. The impugned order is set aside and the case is remitted back to the respondent to pass a fresh order on merits and in accordance with law within a period of eight weeks from the date of receipt of a copy of this order after giving the petitioner an opportunity of being heard through video conferencing. The petitioner shall file a copy of reply dated 19.09.2022 before the date is fixed for a hearing through video conferencing.

Summary

Issues:
The petitioner challenged the impugned Assessment Order u/s 143(3) read with Section 144B of the Income Tax Act, 1961 for the Assessment Year 2020-2021, alleging violation of principles of natural justice and lack of merit in upholding the demand.

Violation of Principles of Natural Justice:
The petitioner responded to a Show Cause Notice belatedly on 19.09.2022 and requested video conferencing on the same day, which was acknowledged. However, the impugned order was passed on 21.09.2022 without considering the petitioner's reply, indicating a clear violation of principles of natural justice.

Merits of the Case:
The respondent argued that the petitioner failed to provide sufficient reasons for dropping the proposal mentioned in the Show Cause Notice related to Foreign Exchange Loss. The respondent highlighted that despite giving ample time, the petitioner submitted an incomplete reply after 53 days, leading to a delay in the assessment process.

Judgment:
The Court observed that the petitioner's reply dated 19.09.2022 was not considered while passing the impugned order, and the order was issued just two days after the petitioner's request for video conferencing. Consequently, the Court set aside the impugned order and remitted the case back to the respondent for a fresh order within eight weeks, ensuring the petitioner's opportunity to be heard through video conferencing. The petitioner was directed to submit a copy of the reply dated 19.09.2022 before the scheduled video conferencing. The Writ Petition was disposed of with these directions, with no costs imposed.