2024 (11) TMI 1323 - HC - Income Tax

Validity of Assessment Order passed - shorter period to respond to SCN - petitioner had been served with the Show Cause Notice dated 21.09.2021. The petitioner was to respond to the same by 23.59 hours on 24.09.2021 - HELD THAT - Assessment order has been passed in a hurry perhaps with a view to avoid the assessment getting lapsed due to the limitation under the Act. Although the respondents cannot have found fault with as the respondents are constrained to pass orders within the time stipulated u/s 153 of the Act. At the same time, the principles of natural justice cannot be casualty to sacrifice the rights of an assessee. Therefore to balance the interest, the Court is inclined to quash the impugned order and remit the case back to the respondent to pass a fresh order on merits and in accordance with law and expeditiously as possible preferably within a period of three months from the date of receipt of a copy of this order.

Summary

Issues:
1. Challenge to Assessment Order for the Assessment Year 2018-2019.
2. Challenge to Penalty Order under Section 270A of the Income Tax Act, 1961.

Detailed Analysis:
Issue 1: The petitioner challenged the Assessment Order dated 25.09.2021 for the Assessment Year 2018-2019. The petitioner had responded to the Show Cause Notice dated 21.09.2021 within the stipulated time. However, the respondents proceeded to pass the impugned order stating that no response was received from the petitioner. The respondents' counter affidavit mentioned that the assessment order was passed under Section 147 rws 144, rejecting the petitioner's books and adding an amount to the income. The petitioner contended that the order was passed in violation of principles of natural justice and sought relief under Article 226 of the Constitution of India. The Court noted that while the assessment had to be completed within the time stipulated by law, the principles of natural justice could not be compromised. The impugned order was quashed, and the case was remitted back to the respondent for a fresh order on merits and in accordance with the law.

Issue 2: The petitioner also challenged the Penalty Order dated 12.02.2022 under Section 270A of the Income Tax Act, 1961, which was linked to the Assessment Order challenged in the first petition. The Court held that if the challenge to the Assessment Order was allowed, the challenge to the Penalty Order would also have to be allowed. The petitioner's contention that there was a violation of natural justice principles in the assessment process was considered, and the Court emphasized the importance of balancing the interests of the assessee with the statutory requirements. The Court directed the respondent to pass a fresh order on the penalty expeditiously, ensuring the petitioner's right to be heard through Video Conferencing in accordance with Section 144B of the Act.

In conclusion, both writ petitions were disposed of, with the impugned orders being quashed, and the matters remitted back to the respondent for fresh consideration. No costs were awarded, and connected writ miscellaneous petitions were closed.