High Court Sets Aside Income Tax Assessment Order Due to Procedural Irregularities

Case Name:

Hindustan Gold Refiners & Mint Private Ltd vs. National Faceless Assessment Centre & Anr (High Court of Delhi)

Key Takeaways:

1. The High Court allowed the petitioner’s application, subject to filing legible copies of the annexures before the next date of hearing.

2. The writ petition challenged the income tax assessment order, notice of demand, and notice initiating penalty under the Income Tax Act.

3. The Assessing Officer was directed to carry out a fresh assessment, considering the petitioner’s reply filed on 16.12.2022 and granting a personal hearing via video-conferencing.

4. The High Court’s decision was based on procedural irregularities and did not impact the merits of the case.

Case Synopsis:

The Case provided is a judgment from the High Court of Delhi, dated 10th January 2023, regarding W.P.(C) 255/2023, titled “Hindustan Gold Refiners & Mint Private Ltd vs. National Faceless Assessment Centre & Anr.” The case was heard by Hon’ble Mr. Justice Rajiv Shakdher and Hon’ble Ms. Justice Tara Vitasta Ganju.

Case Overview:

The petitioner, Hindustan Gold Refiners & Mint Private Ltd, challenged the order dated 24th December 2022 passed under Section 143(3) (of Income Tax Act, 1961) read with Section 144B (of Income Tax Act, 1961), along with the notice of demand dated 24th December 2022 and the notice initiating penalty under Section 270A (of Income Tax Act, 1961) to 271AAC.

Key Points from the Judgment:

1. The petitioner filed a return concerning Assessment Year (AY) 2021-2022 on 14th January 2022.

2. Various notices were issued by the respondents/revenue under different sections of the Income Tax Act, and the petitioner replied to these notices on different dates.

3. The respondents/revenue proposed a variation in the income written by the petitioner via a show cause notice dated 8th December 2022, and the petitioner sought an extension of time to file a response until 18th December 2022.

4. The petitioner filed the reply on 16th December 2022 via e-mail, as the designated portal was closed on 15th December 2022.

5. The impugned order dated 24th December 2022 was passed without the Assessing Officer (AO) having the benefit of the reply filed by the petitioner on 16th December 2022.

6. The High Court set aside the order and directed the Assessing Officer to carry out a fresh assessment, considering the petitioner’s reply and granting a personal hearing via video-conferencing.

Conclusion:

The High Court’s decision was based on procedural irregularities and did not impact the merits of the case. The judgment allowed the petitioner’s application, subject to filing legible copies of the annexures before the next date of hearing.

This judgment highlights the importance of procedural fairness and adherence to timelines in the assessment process under the Income Tax Act, ensuring that the Assessing Officer considers all relevant submissions before passing an order.

FAQ:

Q1: What was the petition about?

A1: The petition challenged the income tax assessment order, notice of demand, and notice initiating penalty under the Income Tax Act.

Q2: What was the High Court’s decision?

A2: The High Court set aside the order and directed the Assessing Officer to carry out a fresh assessment, considering the petitioner’s reply and granting a personal hearing via video-conferencing.

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

A3: The order was set aside due to procedural irregularities, specifically the failure to consider the petitioner’s reply before passing the impugned order.

CM APPL. 963/2023

1. Allowed, subject to the petitioner filing legible copies of the annexures, at least three days before the next date of hearing.

W.P.(C) 255/2023 and CM APPL. 962/2023 [Application filed on behalf of the petitioner seeking interim relief]

2. Issue notice.

2.1 Mr Ajit Sharma accepts notice on behalf of the respondents/revenue.

2.2 In view of the directions that we intend to pass and having regard to the record made available to the court, Mr Sharma says that counter- affidavit need not be filed.

3. Accordingly, with the consent of counsel for the parties, the writ petition is taken up for hearing and final disposal at this stage itself.

4. This writ petition is directed against the order dated 24.12.2022 passed under Section 143(3) (of Income Tax Act, 1961) read with Section 144B (of Income Tax Act, 1961) [in short, “the Act”].

4.1 In addition thereto, challenge is also laid to the notice of demand dated 24.12.2022 issued under Section 156 (of Income Tax Act, 1961) and the notice initiating penalty under Section 270A (of Income Tax Act, 1961) to 271AAC.

5. The record shows that the petitioner had filed a return concerning Assessment Year (AY) 2021-2022 on 14.01.2022.

6. On 27.06.2022, the petitioner was issued a letter intimating that assessment in accordance with the provisions of Section 144B (of Income Tax Act, 1961)

had been completed.

7. Thereafter, on 28.06.2022 a notice under Section 143(2) (of Income Tax Act, 1961) was issued.

7.1 The aforesaid notice was followed by notice dated 29.09.2022 issued qua the petitioner under Section 142(1) (of Income Tax Act, 1961). This notice was apparently replied to by the petitioner on 20.10.2022.

7.2 The respondents/revenue issued further notices under Section 142(1) (of Income Tax Act, 1961) on 10.11.2022 and 15.11.2022. These notices were replied by the petitioner on 12.11.2022 and 22.11.2022 respectively. As a matter of fact, two replies dated 22.11.2022 appear to have been filed by the petitioner.

8. According to the petitioner, the respondents/revenue proposed a variation in the income written by the petitioner via show cause notice dated 08.12.2022. The petitioner was, however, given time till 15.12.2022 to file a response to the said show cause notice.

9. The petitioner avers that on 15.12.2022, extension of time was sought to file a response till 18.12.2022.

10. Apparently, designated portal was closed on 15.12.2022, and therefore the petitioner could file the reply only on 16.12.2022, albeit via e-mail. The impugned order dated 24.12.2022 was passed without the Assessing Officer (AO) having benefit of the reply filed by the petitioner on 16.12.2022.

11. Given the fact that a short accommodation was sought by the petitioner on 15.12.2022, we are of the view that the AO ought to have given petitioner time till 18.12.2022 to submit a reply.

12. Notwithstanding the request made, the petitioner did file a reply on 16.12.2022 albeit via e-mail. Therefore, in fitness of things, we are of the

view that impugned order should be set aside, with liberty to the AO to carry out a fresh exercise.

12.1 It is ordered accordingly.

13. The AO will carry out a de novo exercise from the stage at when show cause notice dated 08.12.2022 was positioned and frame an assessment order, after taking into account the reply dated 16.12.2022 filed by the petitioner.

13.1 Since Dr Rakesh Gupta, at this stage, says that the petitioner would want a personal hearing in the matter as well, the AO will accord opportunity to the authorized representative of the petitioner to be heard in-person.

13.2 The AO will issue a notice fixing the date and time.

13.3 The AO will grant hearing to the authorized representative of the petitioner via video-conferencing (VC).

14. The writ petition is disposed of in the aforesaid terms.

15. Needless to state, since we have not examined the matter on merits, nothing stated above will impact the merits of the case.

RAJIV SHAKDHER, J

TARA VITASTA GANJU, J

JANUARY 10, 2023