BVR Projects Vs Assessment Unit (Andhra Pradesh High Court)
The petitioner, a partnership firm engaged in the business of construction, filed its return of income for Assessment Year 2024-25 declaring a total income of Rs.35,63,490/-. The first respondent issued an intimation under Section 144B of the Income Tax Act, 1961 dated 24.06.2025 along with a notice under Section 143(2). In response, the petitioner submitted its financial statements, tax audit report, computation, and other details on 09.07.2025. Thereafter, a notice under Section 142(1) was issued through the Revenue’s e-proceedings portal.
Subsequently, the first respondent issued a show cause notice under Section 144 dated 28.02.2026, proposing additions of Rs.5,22,51,078/- and requiring the petitioner to submit objections by 13:02 hours on 06.03.2026.
The petitioner contended that the notice was issued on a Saturday and the following day, 01.03.2026, was a Sunday, making the time granted for filing objections unreasonable. It further contended that the assessment order dated 10.03.2026 was passed in violation of the Standard Operating Procedure dated 03.08.2022 governing faceless assessments under Section 144B(6)(xi). According to Clause N.1.3.1 of the SOP, an assessee is to be given seven days to respond to a show cause notice. The petitioner asserted that since the stipulated period was not provided, the assessment order was liable to be set aside on the ground of violation of the principles of natural justice.
The Standing Counsel for the department opposed the writ petition by relying upon the counter affidavit. However, it was not disputed that the SOP had been issued by the Central Board of Direct Taxes.
The High Court observed that it was undisputed that the show cause notice dated 28.02.2026 required objections to be filed by 06.03.2026. It also noted that the time granted did not satisfy the requirement of providing sufficient time as prescribed in the SOP issued under Section 144B(xi). Since the petitioner was not afforded the prescribed seven-day period to respond to the show cause notice, the Court held that the assessment order was liable to be set aside.
The Court further observed that the first respondent had failed to adhere to the SOP issued by the Central Board of Direct Taxes, resulting in the petitioner being deprived of sufficient opportunity to submit its response. It held that this failure not only violated the SOP but also amounted to a violation of the principles of natural justice.
Without examining the merits of the assessment, the High Court set aside the assessment order dated 10.03.2026. The writ petition was allowed, leaving it open to the first respondent to issue a fresh notice and pass appropriate orders in accordance with law. No order as to costs was made, and all pending applications, if any, stood closed.
FULL TEXT OF THE JUDGMENT/ORDER OF ANDHRA PRADESH HIGH COURT
1. The petitioner is a Partnership Firm engaged in the business of construction. For the Assessment Year 2024-2025 the petitioner filed its return of income declaring total income of Rs.35,63,490/-. The 1st respondent issued intimation under Section 144B of the Income Tax Act, 1961 dt.24.06.2025 along with notice under Section 143 (2). In response to the said notice, the petitioner submitted its Financial Statements, Tax Audit Report, Computation etc., on 09.07.2025 in order to provide further details to the respondents. Thereafter, a notice under Section 142 (1) of the Act was issued to the petitioner through the “E-proceedings” facility i.e., by uploading the same in the web portal of the Revenue.
2. In pursuance thereof, the 1st respondent issued show cause notice under Section 144, dt.28.02.2026 proposing to make additions to the tune of Rs.5,22,51,078/- calling upon the petitioner to file its objections by 13:02 hours of 06.03.2026 i.e., by granting four (04) working days to submit objections.
3. It is further case of the petitioner, the said notice was issued on Saturday and 01.03.2026 was holiday on account of it being Sunday thereby the time granted for filing objections is unreasonable. It was further contended that subsequently Assessment Order was passed by the 1st respondent on 10.03.2026 in violation of Standard Operating Procedure dt.03.08.2022 for conducting and completing Faceless Assessments in terms of Section 144B (6) (xi) of the Act. It is further contended that as per clause N.1.3.1 of the SOP, a period of seven (07) days is to be given to an assesses for filing reply to the show cause notice. Since, the time stipulated in the said SOP was not given to the petitioner, so as to file its objections, the present writ petition is filed questioning the Assessment Order dt.10.03.2026 on the ground of violation of principles of natural justice.
5. On the other hand, refuting the submissions of the counsel for the petitioner, the learned Standing Counsel for the department made submissions by relying on the counter affidavit.
However, he does not dispute the SOP issued by Central Board of Direct Taxes.
6. Having considered the submissions made by the counsel on either side, it is not in dispute that show cause notice was issued on 28.02.2026 calling upon the petitioner to submit its objections by 13:02 hours of 06.03.2026. It is also not in dispute that the time granted by the 1st respondent would not meet requirement of granting sufficient time to the petitioner as provided in the SOP, which was issued in terms of Section 144B (xi) of the Act. As the petitioner was not provided with seven days to submit objections to the show cause notice, the same is liable to be set aside.
7. From the above stated position, it is clear that the 1st respondent did not adhere to the SOP issued by Central Board of Direct Taxes, thereby petitioner was deprived of having sufficient time to submit its response/reply to the show cause notice. The action of the 1st respondent is not only in violation of the SOP, but also amounts to violation of principles of natural justice.
8. In the circumstances, without going into the merits of the matter, the impugned assessment order dt.10.03.2026 is set aside for the reasons recorded supra.
9. Accordingly, the Writ Petition is allowed, leaving it open to the 1st respondent to issue a fresh notice to the petitioner and pass appropriate orders, in accordance with law.
10. There shall be no order as to costs. As a sequel, pending applications, if any shall stand closed.
