Case Law Details
Ultra Drugs Private Limited Vs PCIT (Himachal Pradesh High Court)
Introduction: In a significant ruling, the Himachal Pradesh High Court addressed the issue of undue haste in the assessment proceedings under the Income Tax Act, 1961. The court set aside an order passed under Section 143(3) of the Act, highlighting the inadequate time provided to the petitioner, Ultra Drugs Private Limited, to respond to a show-cause notice. The court remitted the matter back to the Principal Commissioner of Income Tax (PCIT) for reconsideration, ensuring that procedural fairness is upheld in tax assessments.
Background of the Case: Ultra Drugs Private Limited, a pharmaceutical manufacturer, filed its return for the assessment year 2022-23 on October 17, 2022. The company’s case was selected for scrutiny, and subsequent notices under Section 142(1) of the Income Tax Act were issued. The petitioner complied with all these notices and furnished detailed replies within the stipulated time frames.
The Show-Cause Notice and Response Timeline: On March 20, 2024, at 10:59 p.m., the petitioner received an email show-cause notice requiring a response by 3:45 p.m. on March 24, 2024. Despite being a Sunday, Ultra Drugs Private Limited managed to submit its response via email at 11:39 p.m. on the same day. However, the e-filing portal had been closed by the Assessing Officer, preventing the petitioner from uploading the response directly onto the portal.
Court’s Observations: The court found the time granted to the petitioner to be excessively short and inadequate for a proper response. It noted that the petitioner was not unduly delayed in its submission but was constrained by the arbitrary deadline and the closure of the e-filing portal. The High Court criticized the Assessing Officer for not considering the petitioner’s timely response and for proceeding with the assessment order without due regard for the submission made on March 24, 2024. The court emphasized that procedural fairness is a cornerstone of tax administration and should not be compromised.
Legal Implications and Remit Order: The court set aside the impugned order dated March 27, 2024, and remitted the matter back to the PCIT. It instructed the PCIT to consider the petitioner’s responses submitted on March 24 and 25, 2024, and to pass a reasoned order in accordance with the law. Furthermore, the court directed that the petitioner be given an opportunity to be heard.
Conclusion: The Himachal Pradesh High Court’s decision underscores the importance of giving taxpayers adequate time to respond to show-cause notices. By remitting the case back to the PCIT, the court has reinforced the principles of natural justice and procedural fairness in the administration of tax laws. This ruling serves as a reminder to tax authorities to ensure that taxpayers are afforded sufficient time and opportunity to present their case, thereby fostering a more equitable tax system.
FULL TEXT OF THE JUDGMENT/ORDER OF HIMACHAL PRADESH HIGH COURT
The petitioner is a private limited company and engaged in the manufacturing of pharmaceuticals etc. in the name and style of “M/s Ultra Drugs Private Limited” and it is an Assessee under the Income Tax Act, 1961 (the Act in short).
2. On 17.10.2022, a return under Section 139(1) of the Act for the assessment year 2022-23 had been filed by the petitioner.
3. On 01.06.2023 a notice under Section 143(2) of the Act was issued, informing the petitioner that his case was selected for of scrutiny under the CASSS.
4. Thereafter, notices under Sections 142(1) of the Act were issued to the petitioner on 31.10.2023 and 16.11.2023. Detailed reply was furnished by the petitioner on 28.11.2023 to the same. Again, notices were issued on 04.01.2024, 17.03.2024 and 18.03.2024 to the petitioner under Section 142(1) of the Act, which were complied by the petitioner.
5. On 20.03.2024, at 10:59 p.m, an e-mail/show-cause notice was received by the petitioner and its Chartered Accountant, seeking a reply by 15.45 p.m. on 24.03 .2024.
6. On 24.03.2024, which was Sunday, the petitioner alleges that the Assessing Officer closed the e-filing portal and restricted the petitioner to file the response; that on 24.03.2024 at 11:39 p.m., response/submission to the show-cause notice was submitted to the National Faceless Assessment Centre by the petitioner through e-mail, which was reiterated in a subsequent e-mail sent on the following day i.e. 25.03.2024 as a reminder, stating specifically that the Income Tax portal was closed, and the same was transferred by the National of Faceless Assessment Centre to the concerned Assessing Officer.
7. On 27.03 .2024, respondent no.2, without considering the reply/submission tendered by the petitioner, had passed an order under Sections 143(3) read with Section 144B of the Act.
8. Assailing the same, this Writ petition is filed.
9. Counsel for the petitioner contended that time granted for submitting reply to the show-cause notice dt. 20.03.2024 of a period less than four days is arbitrary, and sufficient time ought to have been granted by respondent no.2 to enable the petitioner to submit its reply to the show-cause notice dt. 20.03.2024. He further pointed out that the petitioner was ready with the reply and had filed the same on the same day. i.e. 24.03.2024 at 11:39 p.m. through the National Faceless Assessment Centre, but in view of the fact the Assessing Officer had closed the e-filing portal by then on the ground that the petitioner had not submitted the reply by 15:45 p.m. on 24.04.2023, the same could not be uploaded.
10. This Court is of the opinion that the time granted for submitting reply to the petitioner is extremely short, and when there of was no undue delay on the part of the petitioner in submitting the reply and it had submitted the reply on the date fixed i.e. 24.03.2024, though sometime after 15:45 p.m. the same ought not to have been ignored by respondent no.2 and, the impugned order could not have been passed by him.
11. Therefore, the counsel for the Department was asked to ascertain response of respondent no.2 and matter was posted for today.
12. Counsel for respondent no.2 states today that if the impugned order is set aside, they will pass a fresh order after considering the reply of the petitioner submitted to the show-cause notice.
13. Since we are convinced that reasonable time to the petitioner had not been granted by respondent no.2 in the show-cause notice dt. 20.03.2024 to reply to the same and, since there is no undue delay on the part of the petitioner in submitting its reply, which admittedly it did on 24.03.2024, the impugned order dt. 27.03.2024 passed by respondent no.2 is set aside, and the matter is remitted back of to respondent no.2 to consider the reply submitted by the petitioner on 24.03.2024 and 25.03.2024 to the show-cause notice dt. 20.03.2024 and then pass a reasoned order in accordance with law and communicate the same to the petitioner. The petitioner may also be afforded an opportunity of being heard by respondent no.2.
14. The Writ petition is allowed as above. No costs.
15. Pending miscellaneous application(s), if any, also stand disposed of.
Note:
1 Whether reporters of Local Papers may be allowed to see the judgment?
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