High Court of Delhi Sets Aside Assessment Orders Due to Violation of Natural Justice

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Case Name:

RampRastha Buildwell Private Limited & RampRastha Sare Landholding Company One Private Limited Vs. National E-Assessment Centre, Delhi & Anr. (High Court of Delhi)

W.P.(C) 8280/2021 & CM APPL. 25689-90/2021

Date: 12th August 2021

Key Takeaways:

1. Assessment Orders under the Income Tax Act, 1961 were set aside by the High Court of Delhi due to a violation of the principles of natural justice.

2. The Court found that the petitioners did not get an effective and meaningful opportunity to respond to the Draft Assessment Order and show-cause notices due to the lockdown in Delhi caused by the Covid-19 Pandemic.

3. The matters were remanded back to the Respondent-Assessing Officers for taking appropriate steps in accordance with the law.

A judgment from the High Court of Delhi at New Delhi, dated 12th August 2021, regarding two writ petitions: W.P.(C) 8280/2021 and W.P.(C) 8282/2021. The petitioners in both cases are RampRastha Buildwell Private Limited and RampRastha Sare Landholding Company One Private Limited, respectively. They were represented by Mr. Amol Sinha, Mr. Ashvini Kumar, and Mr. Nitin Gulati, Advocates.

The respondents in both cases are the National E-Assessment Centre, Delhi, and another party. The respondents were represented by Mr. Sunil Agarwal, Mr. Tushar Gupta, and Mr. Ruchir Bhatia, Advocates.

The judgment was delivered by Hon’ble Mr. Justice Manmohan and Hon’ble Mr. Justice Navin Chawla. The petitions challenged the Assessment Orders dated 26th April 2021 and 27th April 2021 in W.P. (C) 8282/2021 and W.P. (C) 8280/2021, respectively, passed under Section 143(3) (of Income Tax Act, 1961) read with Section 144B (of Income Tax Act, 1961) for AY 2018-19. The petitioners sought direction to Respondent No. 1 to grant them an opportunity to file objections against the show cause notices dated 21st April, 2021 and 22nd April, 2021 in W.P. (C) 8282/2021 and W.P.(C) 8280/2021, respectively.

The petitioners contended that the impugned Assessment orders were passed without granting them an opportunity to file objections against the notices cum draft assessment orders due to the lockdown in Delhi caused by the second wave of the Covid-19 Pandemic. They argued that their office premises were closed, and they were unable to access their official emails and communicate the notices to their authorized representatives for filing objections/replies against the show cause notices-cum-draft assessment orders.

The Court accepted the contentions of the petitioners and held that there had been a gross violation of the principles of natural justice enshrined in Section 144B (of Income Tax Act, 1961). Consequently, the Court set aside the Impugned Assessment Orders dated 26th April 2021 and 27th April 2021 passed in W.P. (C) 8282/2021 and W.P. (C) 8280/2021, respectively, and remanded the matters back to the Respondent-Assessing Officers for taking appropriate steps in accordance with the law.

The judgment was signed by JASWANT SINGH RAWAT and was uploaded on the website on the same day. A copy of the order was also forwarded to the learned counsel through e-mail.

FAQ:

Q1: What were the petitions about?

A1: The petitions challenged Assessment Orders under the Income Tax Act, 1961 for AY 2018-19 and sought direction to grant the petitioners an opportunity to file objections against the show cause notices.

Q2: Why were the Assessment Orders set aside?

A2: The Assessment Orders were set aside due to a violation of the principles of natural justice, as the petitioners did not get an effective and meaningful opportunity to respond to the Draft Assessment Order and show-cause notices due to the lockdown in Delhi caused by the Covid-19 Pandemic.

1. The petitions have been heard by way of video conferencing.

2. Present writ petitions have been filed challenging the Assessment Orders dated 26th April 2021 and 27th April 2021 in W.P.(C) 8282/2021 and W.P. (C) 8280/2021 respectively, passed under Section 143(3) (of Income Tax Act, 1961) read with Section 144B (of Income Tax Act, 1961) for AY 2018-19. Petitioners also seek direction to Respondent No. 1 to grant an opportunity to the petitioners for filing objections against the show cause notices dated 21st April, 2021 and 22nd April, 2021 in W.P. (C) 8282/2021 and W.P.(C) 8280/2021 respectively.

3. Learned counsel for the Petitioners contends that the impugned Assessment orders have been passed without granting an opportunity of filing objections against the notices cum draft assessment orders as the state of Delhi was under lockdown due to the second wave of Covid-19 Pandemic between date of notices and the date by which replies had to be filed i.e. 23rd April, 2021 and 26th April, 2021 in WP(C) 8282/2021 and WP(C) 8280/2021 respectively.

4. He emphasises that the office premises of the Petitioners were closed between the date of issuance of notices and passing of the impugned orders due to curfew imposed between 19th April, 2021 and 3rd May, 2021 in pursuance to the Delhi Disaster Management Authorities orders and the Petitioners were unable to access their official emails and communicate the notices to their authorised representatives for filing objections/replies against the show cause notices-cum-draft assessment orders. Hence, according to him, there has been a gross violation of the principles of natural justice enshrined in Section 144B (of Income Tax Act, 1961).

5. Issue Notice.

6. Mr.Sunil Agarwal, Advocate and Mr.Ruchir Bhatia Advocate accept notice on behalf of the respondents in WP(C) 8280/2021 and WP(C) 8282/2021 respectively. They state that it has been the consistent stand of NaFAC that in such cases where there has been a lapse of procedure on the part of Faceless Assessing officer due to technical reasons or otherwise, the Court may be requested to set aside the assessment orders and remand the matters back to the Assessing Officer for passing a fresh order after following the due procedure.

7. Having regard to the fact that the offices of the petitioners were closed due to lockdown and the petitioners’ Account Officer was unavailable, this Court is of the view that the petitioners did not get an effective and meaningful opportunity to respond to the Draft Assessment Order and show-cause notices dated 21st April 2021 and 22nd th April 2021.

8. Keeping in view the aforesaid as well as in accordance with the statement made by the learned counsel for the respondents, the Impugned Assessment Orders dated 26th April 2021. and 27th April 2021 passed in W.P. (C) 8282/2021 and W.P. (C) 8280/2021 respectively, under Section 143(3) (of Income Tax Act, 1961) read with Section 144B (of Income Tax Act, 1961) for AY 2018-19 are set aside and the matters are remanded back to the Respondent-Assessing Officers for taking appropriate steps in accordance with law.

9. Writ petition and applications stand disposed of in view of the above.

10. The order be uploaded on the website forthwith. Copy of the order be also forwarded to the learned counsel through e-mail.

MANMOHAN, J

NAVIN CHAWLA, J

AUGUST 12, 2021