2021 (9) TMI 1146 - HC - Income Tax

Penalty notice u/s 271AAC - breach of principles of natural justice - HELD THAT - As prior to the end date given in the show cause notice of 26th March, 2021, the impugned assessment order had been passed on 25th March, 2021. Consequently, the impugned assessment order, notice of demand as well as penalty notice dated 25th March, 2021 are quashed and the matter is remanded back to the Assessing Officer and he is directed to decide the same in accordance with law as expeditiously as possible. Petitioner is directed to file its reply to the show cause notice and draft assessment order within three working days. To facilitate filing of the said reply, AO is directed to open ITBA portal so that the petitioner can file its reply.

Summary

Issues: Challenge to assessment order, notice of demand, and penalty notice under Section 271AAC dated 25th March, 2021. Breach of principles of natural justice due to passing of assessment order before the end date given in the show cause notice.

In this judgment delivered by the Delhi High Court, the petitioner challenged the assessment order, notice of demand, and penalty notice dated 25th March, 2021, on the grounds of a breach of natural justice. The petitioner, represented by Mr. Ved Jain, contended that the impugned assessment order was passed prior to the deadline specified in the show cause notice, thus violating principles of natural justice. The respondents, represented by Mr. Kunal Sharma, sought additional time to file a counter affidavit, but failed to do so despite multiple opportunities granted by the Court.

The Court noted that despite ample time provided to the respondents to file a counter affidavit, none was submitted. Consequently, the Court proceeded with the matter based on the unrebutted averments in the writ petition. The Court found merit in the petitioner's argument regarding the breach of natural justice and quashed the assessment order, notice of demand, and penalty notice dated 25th March, 2021. The matter was remanded back to the Assessing Officer with directions to decide the issue in accordance with the law promptly. The petitioner was instructed to file a reply to the show cause notice and draft assessment order within three working days. The Assessing Officer was directed to open the ITBA portal to facilitate the filing of the petitioner's reply.

Ultimately, the High Court disposed of the writ petition with the aforementioned directions, emphasizing the importance of upholding principles of natural justice in administrative proceedings and ensuring a fair opportunity for the parties involved to present their case.