High Court Sets Aside Assessment Order Due to Violation of Principles of Natural Justice

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Case Name:

Berry Developers and Infrastructure Pvt Ltd vs. National E Assessment Centre (High Court of Delhi)

W.P.(C) 8719/2021 & CM APPL. 27164-27165/2021

Date: 23rd August 2021

Key Takeaways:

1. The assessment order dated 27th April 2021, passed under Section 143(3) (of Income Tax Act, 1961), was set aside by the High Court.

2. The petitioner was not given an adequate and meaningful opportunity to respond to the draft assessment order cum show cause notice dated 20th April 2021.

3. The court found a violation of principles of natural justice and non-compliance with the statutory mandate as enshrined in Section 144B (of Income Tax Act, 1961).

The High Court of Delhi at New Delhi, with the case number W.P.(C) 8719/2021 & CM APPL. 27164-27165/2021. The case involves Berry Developers and Infrastructure Pvt Ltd as the petitioner and the National E Assessment Centre as the respondent. The judgment was delivered on 23rd August 2021 by Hon’ble Mr. Justice Manmohan and Hon’ble Mr. Justice Navin Chawla.

The petitioner challenged the assessment order dated 27th April 2021, passed under Section 143(3) (of Income Tax Act, 1961), on the ground that it had been passed without giving the petitioner/assessee a meaningful opportunity of being heard. The petitioner argued that it was asked to file its response by 23rd April 2021, but due to a complete lockdown in Delhi from 19th April 2021, it couldn’t prepare the response and had sought an adjournment. However, the respondent passed the impugned assessment order without considering the lockdown and the adjournment application of the petitioner.

After considering the arguments and perusing the paper book, the court found that the petitioner had not been given an adequate and meaningful opportunity to respond to the draft assessment order cum show cause notice dated 20th April 2021. The court also noted that there was a violation of principles of natural justice and that the statutory mandate as enshrined in Section 144B (of Income Tax Act, 1961) had not been complied with.

As a result, the court set aside the impugned Assessment Order dated 27th April 2021 and remanded the matter back to the respondent for taking necessary steps in accordance with the law.

FAQ:

Q1: What was the outcome of the judgment?

A1: The High Court set aside the assessment order dated 27th April 2021 and remanded the matter back to the respondent for taking necessary steps in accordance with the law.

Q2: What were the grounds for challenging the assessment order?

A2: The petitioner challenged the assessment order on the ground that it had been passed without giving the petitioner/assessee a meaningful opportunity of being heard.

Q3: What were the key reasons for setting aside the assessment order?

A3: The court found that the petitioner had not been given an adequate and meaningful opportunity to respond to the draft assessment order and noted a violation of principles of natural justice and non-compliance with the statutory mandate as enshrined in Section 144B (of Income Tax Act, 1961).

1. The petition has been heard by way of video conferencing.

2. Present writ petition has been filed challenging the assessment order

dated 27th April, 2021 passed under Section 143(3) (of Income Tax Act, 1961),

1961 (hereinafter referred to as ‘Act’) on the ground that it had been passed without giving Petitioner/assessee a meaningful opportunity of being heard.

3. Learned counsel for the Petitioner states that the Petitioner, vide the

draft assessment order cum show cause notice dated 20th April 2021, was

asked to file its response by 23rd April 2021. She emphasises that a

complete lockdown was imposed in Delhi from 19th April, 2021 and the due

date for completion of Assessment was initially extended to 30th June, 2021

and further to 30th September. 2021. She also points out that the petitioner

on 25th April 2021 had sought an adjournment as it couldn't prepare the

response due to closure of its offices and complete lockdown in Delhi.

4. She emphasises that the Respondent without considering the factum of lockdown and the adjournment application of the Petitioner, passed the

impugned assessment order under Section 143(3) (of Income Tax Act, 1961) dated 27th April 2021 wherein it was wrongfully stated that the Petitioner had not filed a reply and hence had agreed to the additions made by the revenue.

5. Issue Notice. Mr. Vipul Agrawal, Advocate accepts notice on behalf of Revenue.

6. He states that as the adjournment application had been filed after the last date for filing the response i.e., 23rd April, 2021, the said application was of no consequence. He also states that three earlier notices dated 10th February, 2020, 10th March, 2021 and 20th March, 2021 had been issued to the petitioner in the present instance and, therefore, the principle of natural justice had been adequately complied with.

7. Having perused the paper book, this Court finds that the notices dated

10th February, 2020, 10th March, 2021 and 20th March, 2021 had been issued

under Section 142(1) (of Income Tax Act, 1961) and not under Section 144B (of Income Tax Act, 1961). Consequently, the statutory mandate as enshrined in Section 144B (of Income Tax Act, 1961)

has not been complied with in the present instance.

8. This Court also takes judicial notice of the fact that between 19th April, 2021 and 27th April, 2021 there was a complete lockdown in the city

of Delhi. Accordingly, this Court is of the view that Petitioner has not been given an adequate and meaningful opportunity to respond to the draft

assessment order cum show cause notice dated 20th April, 2021 and there has been a violation of principles of natural justice.

9. Consequently, the impugned Assessment Order dated 27th April, 2021 passed under section 143(3) (of Income Tax Act, 1961) is set aside and the matter is remanded back to the Respondent for taking necessary steps in accordance with law. With the aforesaid directions, the present petition along with pending applications stands disposed of.

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 23, 2021