Costs Imposed on AO for Passing Orders in Undue Haste by Bombay HC

Parag Kishorchandra Shah vs. NFAC  W.P. NO.11052 OF 2021 dated 27.10.21 Bombay HC

Brief Facts of The Case

i) Order dated 20.04.21 passed u/s. 143(3) r.w.s 144B;

ii) Assessee had been filing responses to notices u/s 142(1);

iii) Last 142(1) issued on 14.02.21 which was replied on 24.02.21;

iv) On 17.04.21(Saturday) at 02:43 PM A Show Cause Notice (SCN) was issued to the assessee;

v) SCN as to why assessment shouldn’t be completed as per the draft assessment order(DAO);

vi) Assessee was to submit response by 23:59 Hours of 19.04.21(Monday);

vii) Effectively only one day was given to assessee to reply despite Covid-19 situation;

viii) On 19.04.21 Assessee sought 10 days-time due to Covid-19 to fulfil requirements of notice;

ix) Ignoring the Assessee’s Adjournment request On 20.04.21 Assessment order was passed.

Contentions Raised by the Petitioner Assessee:

Principles of Natural Justice not followed as :

i) Adjournment request not considered;

ii) Submissions and Documents have not been considered by the AO while passing the order.

Contentions raised by the Revenue:

i) Affidavit filed by the AO that Assessment was getting time barred on 30.04.21;

ii) Adjournment was sought by the assessee to put pressure on AO

iii) By SCN dated 17.04.21 AO had given time to file reply till 19.04.21;

iv) Therefore there is no Legal Infirmity in the order.

Observations of Hon. Court:

i) Submissions of the Revenue are not unacceptable;

ii) It is like adding “Insult to Injury”;

iii) Even if the assessment was getting time barred on 30.04.21 AO could have at least given 5 days when he took almost 2 months to prepare draft Assessment Order;

iv) We are shocked by The tenor of the Affidavit filed by the AO, where the assessee is accused of bringing pressure;

v) This stand of the revenue is most unfortunate and gives impression of high-handedness;

vi) Even the Documents submitted and submissions made are not considered;

vii) The order is therefore set Aside;

viii) It is fit case to where direction must be given to AO to pay costs, to bring judicious approach amongst AO’s for effective implementation of faceless scheme in letter and spirit;

ix) AO should have been aware of Sub section (9) of Sec. 144B which renders entire assessment non-est. if 144B not complied with;

x) Undue haste in passing orders runs against the purpose of introduction of faceless schemes, resulting in overburdening of the courts;

xi) We direct the AO to pay a sum of 25000/- to PM Cares from his personal account in two weeks.