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TMI Blog2025 (3) TMI 536X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Assessing Officer, National Faceless Assessment Centre, New Delhi ("NFAC" for short) under Section 147 read with Section 144 and 144B of the Income Tax Act, 1961 ("IT Act" for short) and consequential demand notice dated 30 March 2022 issued under section 156 of the IT Act ("Impugned Demand notice" for short). The substantive prayers read thus:- "(a) Declare that the Impugned Order and Demand Notice dated 29 March 2022 (Exhibit A) are illegal, arbitrary, in breach of natural justice, and liable to be quashed and/or set aside; (b) Issue a Writ of Certiorari, or a writ in the nature of Certiorari, or any other appropriate Writ, order or direction under Articles 226 and 227 of the Constitution of India quashing the Impugned Order and Demand Notice dated 30 March 2022 (Exhibit A);" Issue before the Court:- 4. The basic issue for consideration revolves around the legality and validity of impugned assessment order dated 29 March 2022 read with the impugned demand notice which according to the petitioner is in violation of mandatory unamended provisions under Section 144B, read with the first proviso to Section 147 of the IT Act rendering such assessment, ex facie withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 022 to the respondent no. 1 requesting for an adjournment of 15 days to file her reply to the above notices, in the light of the difficulties faced by her during the Covid pandemic period, coupled with the fact that the partner of her chartered accountant firm was recuperating after a serious surgery. 11. Further to the above, there was no formal order on the request for adjournment, nor there was any extension granted on the online portal of the Income Tax. In view thereof, the petitioner was unable to upload any document or replies even after the 15 days' adjournment period that was sought by her. As seen from the record, no fresh show cause notice was issued to the petitioner. 12. Respondent no. 1 issued a show cause notice-cum-draft assessment order dated 16 March 2022 to the petitioner under Section 144 of the IT Act. It was stated therein that there had been non-compliance by the petitioner with the earlier notices issued by the respondent no. 2 dated 28 December 2021 and 8 January 2022. Respondent no. 1 by such show cause notice-cum-draft assessment order proposed to make a best judgment assessment under Section 144 of the IT Act bringing to tax the entire amount of Rs. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Mr. Naniwadekar, learned counsel for the petitioner in support of his submissions primarily assailed the impugned order dated 29 March 2022. According to him, the said order was arbitrary, illegal, irrational in as much as it was passed without following the mandatory procedure under Section 144B of the IT Act, in gross violation of the well settled principles of natural justice. 17. Mr. Naniwadekar would then submit that a bare perusal of Section 144B (1) (xvi) of the IT Act clearly contemplates for providing an opportunity to the assessee in case any variation prejudicial to the interest of the assessee is proposed by serving a show cause notice as to why the proposed variation should not be made. He would also submit that clause (xiv) of the above provision would require that the assessment unit shall take into account all relevant material available on record before passing the draft assessment order. Adverting to the facts of the present case, he would submit that the letter dated 14 January 2022 addressed by the petitioners to the respondent requesting for an adjournment to respond to the notices issued under Section 142 (1) of the IT Act dated 28 December 2021 and 8 Janua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not have been reassessment, in respect of the petitioner for the A.Y. 2014-15 after expiry of 4 years from such period specially when the petitioner made true and full disclosure of facts necessary for assessment. In view thereof, Mr. Naniwadekar would argue that the impugned assessment order dated 29 March 2022 resulting in the reopening the assessment of the petitioner for the A.Y. 2014-15, was clearly without jurisdiction thus, legally untenable. 21. Mr. Naniwadekar would emphasize on the following submissions of the petitioner which were made in the reply dated 24 March 2022 with detailed supporting documents referred to in the facts narrated (Supra) in the form of annexures being : (a) Petitioner's major source of income is the income received from "Suresh V. Vaze family trust" in the capacity of a beneficiary on which tax had already been paid by the trust in earlier years; (b) A Central Board of Direct Taxes ("CBDT" for short) Circular was relied on to state that in such circumstances, there could be no question of bringing the amount to tax again in the hands of petitioner; (c) Detailed supporting documentation in the form of nine annexures were also uploaded. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iance on a decision of coordinate bench of this Court in the case of Cheftalk Food and Hospitality Services (P) Ltd v. Income Tax Officer 2024 SCC OnLine Bom 2634 of which one of us (G.S. Kulkarni, J.) was a member. In the said decision, it was held that where the assessment was passed without giving 7 days time to the assessee to file objection in response to the show cause notice issued the impugned order was in breach of the principles of natural justice and thus deserves to be quashed and set aside. The Court had relied upon Standard Operating Procedure ("SOP" for short) issued under Section 144B (6) (xi) of the IT Act which provides for a response time given to the assessee to file reply to the show cause notice. Mr. Naniwadekar would submit that the respondents were in breach of such SOP in the given case which has resulted in violation of the principles of natural justice qua the petitioner. In view thereof, the impugned assessment order dated 29 March 2022 passed without jurisdiction also devoid of merit ought to be set aside. Submissions of the Respondents:- 24. On the other hand, Mr. Akhileshwar Sharma, the learned counsel for the respondents supported the impugned ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulated period, the petitioner failed to comply with the terms of the notice issued under Section 142 (1) dated 28 December 2021. Thereafter, another notice dated 8 January 2021 under Section 142 (1) of the IT Act was issued to the petitioner communicating the date of hearing to be held on 14 January 2022. In response to such letter the petitioner addressed a letter dated 14 January 2022 through e-filing portal requesting for an adjournment for 15 days. That the letter dated 14 January 2022 filed by the petitioner was duly considered and no proceedings were initiated by the respondents against the petitioner, during the adjourned period. Thus, according to Mr. Sharma, the petitioner is not right in submitting that the letter of the petitioner dated 14 January 2022 seeking for adjournment was not considered and or no formal order was passed on such adjournment request. In this context, Mr. Sharma would urge that the SOP and requirements under section 144B of the IT Act were duly complied with and the entire procedure as stipulated under the said statutory provision was followed. Consequently, there is no breach of the principles of natural justice as wrongly alleged by the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecourse to the extraordinary remedy available under Article 226 of the Constitution of India. Mr. Sharma would, in support of his submissions would rely on the decisions of the Supreme Court in the case of CIT v. Chhabil Dass Agarwal (2014) 1 SCC 603 read with another decision in the case of Assistant Collector of Central Excise, Chandan Nagar, West Bengal v. Dunlop India Limited and Others (1985) 1 SCC 260 to infer that the petitioners are precluded from invoking the writ jurisdiction under Article 226 of the Constitution of India when alternate statutory remedies under Section 246A and Section 264 are clearly available. He would thus submit that the petition deserves to be dismissed on this ground alone. Analysis and Conclusion : 30. At the very outset, to holistically appreciate and adjudicate on the disputes that arise in this petition it would be necessary to refer to provisions of Section 144 of the IT Act as applicable, under which the Assessing officer can take recourse to best judgment assessment in the situations specified in the said provision, the relevant portion of which is extracted below:- "Faceless Assessment Section 144B (1) Notwithstanding anything to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional Faceless Assessment Centre on or before the date and time specified in the notice or within the extended time, if any." (emphasis supplied) 31. Applying the above provisions of the IT Act to the facts of the present case, it is discernible that the respondent no. 1 failed to consider all the relevant material more particularly, the detailed reply of the petitioner dated 24 March 2022 along with annexures, filed in response to the show cause notice-cum-draft assessment order dated 16 March 2022. A bare perusal of the said reply would reveal that the assessment officer had all the information available before him as disclosed by the petitioner necessary for assessment proceedings, as mandated under first proviso to Section 147 of IT Act. However, respondent no. 1 overlooking all of the above, rushed to invoke Section 144 of IT Act for best judgment assessment. The jurisdictional assessing officer proceeded further, failing to consider much less deal with the petitioner's letter dated 14 January 2022 in response to notice issued by respondents dated 9 December 2021 recording reasons for reopening assessment for A.Y. 2014-15. 32. As submitted by Mr. Naniwadekar, a careful p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.3.1 Response time of 7 days from the issue of SCN. N.1.3.2 Response time of 7 days may be curtailed, keeping in view the limitation date for completing the assessment." It is hence clear that respondent nos. 1 and 2 have acted in breach of the above SOP under section 144B of the IT Act. This is as much as the petitioner was given only 3 days' time to reply to the show cause notice-cum-draft assessment order dated 16 March 2022, up to 23:59 hours of 19 March 2022, as against the clear response time of 7 days in the SOP ex facie contrary to such SOP. Also, the petitioner's letter dated 14 January 2022 was not even considered nor any fresh notice issued by the respondent no. 1 to the petitioner, before straightaway issuing the show cause notice-cum-draft assessment order dated 16 March 2022. This makes it amply clear that the respondents have deprived the petitioner of a reasonable opportunity of placing all the relevant material, documentation necessary for the respondents to take a legally informed decision. Respondent nos.1 and 2 have thus acted in breach of the principles of natural justice which are inbuilt and ingrained in the statutory SOP issued under Section 144B of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be quite mechanical, who ought to have been more sensitive to the cause which was brought before him when the petitioner prayed for condonation of delay. In such context, we may observe that it can never be that technicalities and rigidity of rules of law would not recognize genuine human problems of such nature, which may prevent a person from achieving such compliances. It is to cater to such situations the legislature has made a provision conferring a power to condone delay. These are all human issues and which may prevent the assessee who is otherwise diligent in filing returns, within the prescribed time. We may also observe that the PCIT is not consistent in the reasons when the cause which the petitioners has urged in their application for condonation of delay was common. 7. We may observe that it would have been quite different if there were reasons available on record of the PCIT that the case on delay in filing returns as urged by the petitioners was false, and/or totally unacceptable. It needs no elaboration that in matters of maintaining accounts and filing of returns, the assessees are most likely to depend on the professional services of their Chartered Accountants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay. All contentions of the parties on the merits of the returns are expressly kept open." Juxtaposing the above, to the given facts, we may observe that the petitioner by her letter dated 14 January 2022 had sought adjournment of 15 days to reply to the notices dated 9 December 2021 with set out reasons for reopening of petitioner's assessment along with letters dated 28 December 2021 and 8 January 2022 issued under Section 142 (1) of the IT Act by the respondents to the petitioner. Time to respond was sought by the petitioner, primarily on the ground of the then prevalent Covid-19 pandemic coupled with the fact that the partner of the firm of chartered accountants of the petitioner was recuperating after a serious surgery. The reasons appear to be bona fide attributable to human factors which necessarily require due consideration when it comes to compliance of timelines even under the IT Act. In our view, the foundational principles of audi alteram partem are not just paramount but jurisprudentially accepted in the IT Act as noted by us above. One cannot take a pedantic view by not permitting the assessee to file her returns, which would be counter to the very object and purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atrix as in the given case held thus:- "1. It is unnecessary to go into great detail in these matters for there is a statement in the order of the Tribunal, the fact-finding authority, that reads thus : "We will straightaway agree with the assessee's submission that the Income-tax Officer had not given to the assessee proper opportunity of being heard." 2. That the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is the assessment order that counts. That order must be made after the assessee has been given a reasonable opportunity of selling out his case. We, therefore, do not agree with the Tribunal and the High Court that it was not necessary to set aside the order of assessment and remand the matter to the assessing authority for fresh assessment after giving to the assessee a proper opportunity of being heard. 3. Two questions were placed before the High Court, of which the second question is not pressed. The first question reads thus : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not setting aside the assessment order in spite of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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