J J Foods Private Limited Vs DCIT (Delhi High Court)
Reply Was Late, but Already on Record—AO Cannot Shut His Eyes & Then Open Reassessment u/ss 148A(d) & 148: Delhi HC
Summary: The Delhi High Court has held that where an assessee’s reply to a notice under Section 148A(b) was already available on the income-tax portal before the AO passed the order under Section 148A(d), the AO ought to have considered it, notwithstanding that it was filed after the shortened deadline fixed by him.
The Court observed that the statute contemplated a period of 30 days for filing the reply. There was no pressing urgency requiring the AO to curtail the assessee’s effective opportunity to approximately 15 days. Passing the order without considering the reply already uploaded on the portal amounted to an irregular exercise of power & violation of the principles of natural justice.
Facts of the Case
J J Foods Pvt. Ltd. received a show-cause notice under Section 148A(b) dated 22.02.2024, calling upon it to submit its reply by 03.03.2024.
On 03.03.2024, the assessee requested an adjournment of 15 days. The AO granted a short adjournment & fixed 08.03.2024 as the next date.
On 08.03.2024, the assessee once again requested two weeks’ time to file its reply. Instead of granting the requested period, the AO allowed only two additional days & directed the assessee to submit its response by 10.03.2024.
The assessee’s accountant was stated to be out of station. Therefore, the assessee could not submit the reply within the two-day period. On 09.03.2024, even before expiry of the deadline, it sent an email requesting 15 days’ further time.
The assessee eventually uploaded its detailed reply on 15.03.2024.
Despite the reply being available on the portal, the AO passed an order under Section 148A(d) on 18.03.2024 without considering it. A consequential notice under Section 148 was also issued on the same date.
The assessee challenged both the order under Section 148A(d) & the consequential reopening notice before the Delhi High Court.
Assessee’s Argument
The assessee contended that its reply dated 15.03.2024 was already available to the AO when he passed the order on 18.03.2024.
Even if the reply had been filed beyond the curtailed deadline of 10.03.2024, the AO could not simply ignore a substantive response that was actually available before him. Consideration of that reply would not have caused any prejudice to the Revenue or interfered with the statutory timeline.
The assessee argued that the proceedings under Section 148A were intended to provide a meaningful opportunity to explain why reassessment should not be initiated. Passing the order without considering the reply rendered that opportunity illusory & caused serious prejudice.
The omission therefore amounted to a violation of the principles of natural justice.
Revenue’s Defence
The Revenue submitted that sufficient opportunities had already been granted to the assessee.
The original deadline was 03.03.2024. It was thereafter extended to 08.03.2024 & finally to 10.03.2024. Since the assessee failed to submit its response within the time specifically allowed, the AO was justified in disregarding the belated reply filed on 15.03.2024.
The Revenue emphasised that if an assessee expected the AO to adhere strictly to the statutory timelines, the assessee must equally comply with the deadlines prescribed by the AO. According to the Revenue, no further indulgence was warranted.
Thirty-Day Opportunity Could Not Be Arbitrarily Curtailed
The High Court examined the sequence of dates & found that the original notice under Section 148A(b) was issued on 22.02.2024.
The Court observed that the statute made a period of 30 days available to an assessee for submitting its reply. Accordingly, the AO had sufficient time, at least until 22.03.2024, to receive & consider the assessee’s response.
There was no compelling urgency requiring the AO to restrict the assessee’s time for filing its reply to 10.03.2024.
The Court held that curtailing the effective opportunity from 30 days to approximately 15 days seriously prejudiced the assessee’s rights. This was particularly so because, on 09.03.2024—a day before the deadline—the assessee had already emailed the AO seeking further time.
In these circumstances, the AO ought to have granted a reasonable extension to secure the ends of justice.
Reply Already Uploaded Could Not Be Ignored
The High Court further noted that the assessee had uploaded its reply on 15.03.2024, whereas the order under Section 148A(d) was passed only on 18.03.2024.
Thus, the reply was already present on the portal & available for consideration when the AO took his decision. The AO could easily have examined it before deciding whether it was a fit case for issuance of notice under Section 148.
His decision to ignore the reply merely because it was filed beyond the shortened deadline was found to be procedurally irregular & contrary to the principles of natural justice.
Delhi HC’s Decision
The High Court set aside the order dated 18.03.2024 passed under Section 148A(d) as well as the consequential notice issued under Section 148.
The AO was directed to pass a fresh order under Section 148A(d) after duly considering the assessee’s reply dated 15.03.2024 in accordance with law & without being influenced by the earlier order.
The Court clarified that it had expressed no opinion on the merits of the assessee’s case. The AO remained free to take an independent view regarding the existence of jurisdiction to initiate reassessment proceedings.
Author’s Comments
The judgment reinforces that the opportunity contemplated under Section 148A(b) must be real, reasonable & effective, not merely a date entered on the portal.
Though statutory timelines deserve discipline from both sides, procedural delay cannot justify deliberate non-consideration of a reply that was already before the AO prior to his decision. The object of s.148A is to prevent unnecessary reassessment after hearing the assessee—not to complete a procedural race before the assessee’s explanation can be examined.
In short, a deadline may close the filing window, but it cannot blind the AO to a reply already lying on his screen before he signs the reopening order.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The instant writ petition assails the order dated 18.03.2024 passed under Section 148A(d) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act of 1961’) and corresponding notice issued under Section 148 of the Act of 1961.
2. Mr. Ruchesh Sinha, learned counsel for the petitioner, apprised the Court about the facts of the case and submitted that initially a notice under Section 148A(b) of the Act of 1961 was issued to the petitioner on 22.02.2024 fixing the date of hearing as 03.03.2024 on which date the petitioner sought an adjournment for 15 days.
3. On 03.03.2024, the Assessing Officer adjourned the hearing to 08.03.2024; on which date, the petitioner again sought an adjournment for two weeks but the Assessing Officer instead only granted two days’ time to file reply, i.e., by 10.03.2024. According to the petitioner, since its accountant was out of station, it could not file reply and thus, a request for adjournment was sent seeking 15 days’ time to file reply. The reply was, however, filed on 15.03.2024.
4. Though a reply had been filed on 15.03.2024, the Assessing Officer proceeded to pass an order under Section 148A(d) of the Act of 1961 on 18.03.2024 however, without considering the reply which the petitioner/assessee had filed on 15.03.2024.
5. Learned counsel argued that when the Assessing Officer was having petitioner’s reply duly filed on 15.03.2024, he ought to have at least considered the reply, while passing the order under Section 148A(d) of the Act of 1961. He added that non-consideration of the reply filed by the petitioner has led to violation of principles of natural justice and has caused serious prejudice to the petitioner.
6. Mr. Anurag Ojha, learned Senior Standing Counsel, on the other hand, submitted that two opportunities had already been granted to the petitioner and the last date for filing the reply given to the petitioner was 10.03.2024 and since the petitioner had failed to file its reply by such date (10.03.2024), the reply which the petitioner had filed was liable to be and rightly ignored by the Assessing Officer.
7. He argued that the statute provides for specified time limit and when the assessee wants an Assessing Officer to stick to timeline, it is equally required of the assessee to adhere to the time allowed to it. He prayed that no indulgence be granted to the petitioner and writ petition be dismissed.
8. Heard learned counsel for the parties.
9. On perusal of the material available on record and upon hearing learned counsel for the parties, we note that the first notice which was issued to the petitioner under Section 148A(b) of the Act of 1961 required the petitioner to file reply by 03.03.2024, on which date the petitioner sought an adjournment and the next date of hearing was fixed as 08.03.2024. The petitioner sought an adjournment and only two days’ time was allowed to the petitioner to file reply. It is noteworthy that a period of 30 days is available to an assessee for filing the reply as per the statute.
10. Such being the position, the Assessing Officer had enough time left at his disposal, (at least upto 22.03.2024) to take petitioner’s reply. There was no pressing hurry to eschew petitioner’s right to file reply or to confine its right to file reply by 10.03.2024.
11. We are of the view that curtailing petitioner’s right or time to file reply from 30 days to practically 15 days (from 03.03.2024 to 10.03.2024) has seriously prejudiced petitioner’s right and considering that on 09.03.2024, a day ahead of the due date of filing reply, the petitioner had sent an e-mail to the Assessing Officer to grant two weeks’ time, the Assessing Officer ought to have granted some time to the petitioner, so as to serve the ends of justice.
12. That apart, the petitioner’s reply had already been uploaded, hence, the Assessing Officer could very well see and consider the reply so filed before passing an order, but he has chosen not to do so.
13. The AO’s approach suffered from irregularity and led to violation of principles of natural justice. We, therefore, set aside the impugned order dated 18.03.2024 passed under Section 148A(d) of the Act of 1961 and consequential notice of even date, issued under Section 148 of the Act of 1961. The Assessing Officer shall pass a fresh order under Section 148A(d) of the Act of 1961 after considering petitioner’s reply dated 15.03.2024 in accordance with law, without being influenced by the earlier order which he had passed.
14. We hereby made it clear that we have not made any observation or recorded finding about the petitioner’s case on merit in any manner and therefore, the Assessing Officer shall be free to take independent view of the matter, so far as the jurisdiction to initiate proceedings against the petitioner is concerned.
15. The writ petition stands allowed accordingly.
16. The pending application is also disposed of.
