Jitendra Jamnadas Ashar Vs Additional/Joint/Deputy/ACIT/ITO & Ors. (Bombay High Court)
Summary: Faceless assessment set aside for denial of effective opportunity of hearing where the assessee’s request for additional time was not decided and subsequently uploaded documents were not considered; assessment restored to the show-cause-notice stage for fresh adjudication.
Core Issue
Whether a faceless assessment completed under sections 143(3) read with 144B of the Income-tax Act, 1961, along with consequential penalty notices, could be sustained when the assessee was effectively given only four working days to respond to the show-cause notice, his request for 15 days’ additional time was neither accepted nor rejected, and the detailed response and documents subsequently uploaded on the Department’s e-portal were not considered before the assessment order was passed.
Facts
The assessee was subjected to assessment proceedings for AY 2024-25 and had complied with various notices issued under section 142(1). Thereafter, a show-cause notice dated 17 February 2026 was issued proposing certain variations and requiring a response by 24 February 2026. Although the notice formally provided several calendar days, the assessee effectively had only four working days because 19 February 2026 was a public holiday and 21 and 22 February 2026 were Saturday and Sunday. On 24 February 2026, the assessee submitted part details and requested an additional 15 days to collect and furnish the remaining information and material.
The Assessing Officer did not communicate whether the request for adjournment had been accepted or rejected and proceeded to pass the assessment order dated 3 March 2026, digitally signed on 6 March 2026, determining total income at Rs. 13,48,19,050/- and raising a demand of Rs. 11,53,21,080/-. Penalty notices under sections 270A and 271AAC(1) were also issued. Meanwhile, being unaware that the adjournment request had not been accepted, the assessee submitted a further detailed response along with supporting documents on 5 March 2026 through the Department’s e-portal, which remained open. However, the assessment order did not consider either the material uploaded on 24 February 2026 or the further material uploaded on 5 March 2026.
AO / Revenue Finding
The assessment was completed without granting the assessee the requested additional time or an effective opportunity to respond to the proposed variations. The Revenue defended the assessment before the High Court, while contending that the assessee had failed to establish grounds for interference. The assessment resulted in determination of total income of Rs. 13,48,19,050/- and demand of Rs. 11,53,21,080/-, along with initiation of penalty proceedings under sections 270A and 271AAC(1).
High Court Finding
The High Court noted that the assessment was challenged on the ground of violation of principles of natural justice and the requirements of section 144B. The Court took note of the fact that the assessee had sought additional time and that no communication had been made regarding acceptance or rejection of that request before the assessment was completed. The Court further noted that the assessee had subsequently uploaded complete details and documents on 5 March 2026, while the portal was still open, but those materials were not considered in the assessment order.
The Revenue fairly accepted that the assessment should be reconsidered after providing the assessee a proper and effective opportunity of hearing. In view of this concession and the circumstances of the case, the Court held that the assessment could not be sustained in its existing form and required reconsideration from the show-cause-notice stage.
Directions of the High Court
The assessment order dated 3 March 2026 and all consequential penalty notices were set aside. The matter was remanded to the Assessing Officer/NFAC from the stage of the show-cause notice. The assessee was to be informed that the portal had been reopened and was permitted to file any further reply within seven days. Thereafter, a personal hearing was required to be granted with at least three working days’ notice. The Court further directed that if the Assessing Officer proposed to rely upon any decision or other material, the same must first be put to the assessee. The fresh assessment was required to be a reasoned order dealing with all contentions raised by the assessee and was to be completed within 12 weeks from uploading of the High Court’s order.
Outcome
The writ petition was allowed in terms of the directions issued by the High Court. The assessment order, demand and consequential penalty notices were set aside, and the assessment was restored to the show-cause-notice stage for fresh consideration after granting an effective opportunity of hearing and considering the material furnished by the assessee. There was no order as to costs.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Rule. Respondents waive service. With the consent of the parties, Rule made returnable forthwith and heard finally.
2. The present Petition challenges, inter alia,
(i) the Assessment Order dated 3rd March 2026 passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961 (for short ‘the IT Act’),
(ii) the notice of demand dated 3rd March 2026 under Section 156 and
(iii) the penalty notices dated 3rd March 2026 issued under Sections 270A and 271AAC(1) of the IT Act. The Assessment Year is A.Y. 2024-25, in which the total income of the Petitioner was assessed at Rs.13,48,19,050/- and a demand of Rs.11,53,21,080/- is raised.
3. The short ground on which a challenge has been laid to the Assessment Order [and the consequential notices] is that the same has been passed in gross violation of the principles of natural justice and in violation of the provisions of Section 144B of the IT Act read with the Standard Operating Procedures issued by NFAC.
4. During the course of the assessment proceedings, various notices under section 142(1) were issued by Respondent No. 1 from time to time, and the Petitioner had complied with all such notices. Thereafter, Respondent No. 1 issued a show cause notice dated 17th February 2026, asking the Petitioner to show cause as to why the proposed variation (in the show cause notice) should not be made, and the assessment should not be completed accordingly. The Petitioner was asked to submit his response by 17.54 hours on 24th February 2026. Therefore, effectively, only four working days were given to the Petitioner to reply to the said show cause notice, as 19th February 2026 was a public holiday and two days were a weekend, i.e., 21st February 2026 and 22nd February 2026 were Saturday and Sunday, respectively.
5. The Petitioner filed his letter dated 20th February 2026 on 24th February 2026, submitting part details and requesting Respondent No. 1 to grant additional time of 15 days’ as some further information/material was required to be gathered in order to comply with the aforesaid notice.
6. Respondent No. 1, without intimating the Petitioner that his adjournment request has been accepted/rejected, directly passed the impugned Assessment Order dated 3rd March 2026 (digitally signed on 6th March 2026, at 03:37:19 IST) under section 143(3) read with Section 144B of the Act by assessing the total income of the Petitioner at Rs. 13,48,19,050/-. Further, penalty proceedings were initiated by issuing notice under Section 270A of the Act dated 3rd March 2026 (which was digitally signed on 5th March 2026, at 19:30:56 IST, i.e. before the passing of the Assessment Order) for under-reported income which is in consequence of misreporting thereof, as per the details given in the Assessment Order. Further, penalty proceedings were initiated by issuing a notice under Section 271AAC(1) of the IT Act (which has been digitally signed on 5th March 2026 at 22:36:51 IST, i.e. before the passing of the Assessment Order) for income determined under the provisions of Section 115BBE of the IT Act.
7. The Petitioner pointed out to us that he, being unaware that his adjournment request (made vide letter dated 20th February 2026) had been rejected, and an Assessment Order was already passed, filed a letter dated 5th March 2026, submitting complete details and documents in response to the show cause notice dated 17th February 2026, and uploaded the same on the e-portal of the Department, which was still open for the Petitioner. The Assessment Order signed on 6th March 2026 does not take into consideration the details and documents uploaded by the Petitioner either on 24th February 2026 or 5th March 2026.
8. Faced with these facts, Ms. Mamta Omle, the learned Advocate for the Revenue, on instructions, fairly stated that the matter may be remanded to the Assessing Officer/NFAC, and it may be directed to pass a fresh Assessment Order after giving a proper and effective opportunity of being heard to the Petitioner.
9. In view of the fair stand taken by the Revenue, the Assessment Order dated 3rd March 2026 and all the penalty notices are hereby set aside. The matter is now remanded to the file of the Assessing Officer from the stage of the show cause notice. He shall issue a notice to the Petitioner informing him that the portal has been opened. The Petitioner, if he wants to file any further reply, can file the same within 7 days thereafter. The Petitioner, thereafter, shall be issued a notice of a personal hearing granting at least 3 working days to the Petitioner to appear before the Assessing Officer. If the Assessing Officer wants to rely upon any decision or any other material, he shall put the same to the Petitioner before passing the Assessment Order. The Assessment Order so passed shall be a reasoned order dealing with all the contentions raised by the Petitioner. The above process of completing the assessment shall be carried out within a period of 12 weeks from the date of uploading of the present order.
10. Rule is made absolute in the aforesaid terms, and the Writ Petition is also disposed of in terms thereof. However, there shall be no order as to costs.
11. This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.
