Vikas Industries Vs National E-Assessment Centre & Anr. (Gujarat High Court)
The Gujarat High Court considered a petition filed by Vikas Industries challenging an assessment order passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961 for AY 2021-22, along with a penalty notice under Section 274 read with Section 271AAD(1)(i). The petitioner had received a scrutiny notice on 15.12.2022 proposing variations to its return and was given only two days to respond. On 17.12.2022, the petitioner sought an adjournment on the ground that insufficient time had been provided. The petitioner further stated that it attempted several times on 21.12.2022 to upload its reply, but the portal was closed and the “submit response” option was unavailable. A grievance and email were thereafter submitted informing the respondents of the difficulty.
The petitioner contended that the assessment order was passed in violation of natural justice because adequate time was not granted and the adjournment request and attempted response were not considered. Reliance was placed on M/s. Advance Reality Developers v. National E-Assessment Centre, Delhi, where the Court had observed that a minimum of 15 days was a reasonable time for responding. The Revenue did not controvert the submissions and requested the Court to pass an appropriate order.
The Court held that it was undisputed that only two days had been granted for filing the reply. It observed that the principle of Audi Alteram Partem requires the other side to be heard before an order is passed and found that the petitioner was not given appropriate time to respond. The Court therefore held the impugned assessment and penalty proceedings to be untenable and quashed and set them aside. The matter was remanded to the Assessing Officer for a fresh de novo order after considering the petitioner’s reply and providing an opportunity of hearing. The exercise was directed to be completed within 12 weeks from receipt of the Court’s order. The Rule was made absolute to that extent, with no order as to costs.
Cases Discussed
- M/s. Advance Reality Developers v. National E-Assessment Centre, Delhi, Special Civil Application No. 7731 of 2021
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Heard learned advocate Mr. Darshan Patel for the petitioner and learned Senior Standing Counsel Mr. Karan Sanghani for the respondents.
2. Rule returnable forthwith. Learned Senior Standing Counsel Ms. Maithili Mehta waives service of notice of rule on behalf of the respondents.
3. Having regard to the controversy involved which is in a narrow compass, with the consent of the learned advocates for the parties, the matter is taken up for hearing.
4. By this petition under Article 226 of the Constitution of India, the petitioner has prayed to quash and set aside the impugned Assessment Order dated 28.12.2022 passed by the respondent under Section 143(3) read with Section 144B of the Income Tax Act, 1961 (For Short “the Act”) along with penalty notice dated 28.12.2022 under Section 274 of the Act read with Section 271AAD (1) (i) of the Act for the Assessment Year 202122.
5. The brief facts of the case are as under :-
5.1. The petitioner is a Partnership Firm and has filed its return of income for Assessment Year 2021-22. The petitioner received notice for scrutiny assessment on 15.12.2022 at 13:50:29 hours inter alia proposing variations to the return of income. The petitioner was asked to respond to the show cause notice within a period of two days. It is the case of the petitioner that in response to the notice dated 15.12.2022, the petitioner preferred communication/application to the respondent on 17.12.2022 at 12:21 pm requesting for an adjournment as the respondent had granted less than two days time to file reply to the show cause notice.
5.2. It is the case of the petitioner that on 21.12.2022 at 01:14 pm, 04:46 pm, 06:23 pm and 08:04 pm, the petitioner tried to upload his reply to the show cause notice dated 15.12.2022, however, as the portal was closed, the petitioner could not upload the reply. Subsequent thereto, the petitioner filed a grievance requesting to activate the “submit response” button on 21.12.2022. Thereafter, the petitioner wrote an E-mail to respondent no. 2 informing that an attempt was made by the petitioner to file reply to the show cause notice. It was informed by the petitioner that while submitting the reply, the button of “submit reply” was deactivated and therefore the petitioner was not in a position to file reply. It is the case of the petitioner that despite such communication forwarded by the petitioner, the respondent went ahead to pass a final Assessment order under Section 143(3) of the Act read with Section 144B of the Act on 28.12.2022 without considering the reply filed by the petitioner. On the same date the petitioner also received notice under Section 274 of the Act read with Section 271AAD(1) (i) of the Act. Both the Assessment Order as well as penalty notice are impugned in the present writ petition.
6. Learned advocate Mr. Darshan Patel for the petitioner submitted that the final Assessment Order passed by the respondent is in gross violation of the principles of natural justice. In the show cause notice dated 115.12.2022, the respondent granted time of less than two days time to the petitioner to file its reply. It was further submitted that non-granting minimum 15 days time is contrary to the decision of this Court in case of M/s. Advance Reality Developers v. National E-Assessment Centre, Delhi rendered in Special Civil Application No. 7731 of 2021 dated 20.12.2021 wherein this Court has observed that minimum 15 days’ time is a reasonable time.
6.1. It was further submitted by learned advocate Mr. Darshan Patel that the respondent had not considered the adjournment application preferred by the petitioner and has also not taken in to consideration the reply before passing the final Assessment Order. It is further submitted that the respondent had passed the final Assessment Order with a predetermined approach and without granting adequate opportunity of hearing to the petitioner which is detrimental to the petitioner.
7. Per contra, learned Senior Standing Counsel Ms. Maithili Mehta for the respondent could not controvert the submissions made by learned advocate Mr. Darshan Patel. In wake of such acceptance, learned Senior Standing Counsel Ms. Mehta requested the Court to pass appropriate order.
8. Having heard the learned counsel for the respective parties and having gone through the material placed on record, it is not in dispute that the respondent had given only two days’ time to file the reply. It is a fundamental proposition of law that the other side should be heard before any order is passed. The maxim of Audi Alteram Partem is broad enough to include the rule against bias since a fair hearing is must for it to be unbiased hearing. In the instant case, the fact is not in dispute that the petitioner was not given appropriate time to respond to the notice issued under Section 142(1) of the Act and the final Assessment Order was passed without hearing the petitioner.
9. In view of the same, the impugned Assessment Order dated 28.12.2022 passed by the respondent under Section 143(3) read with Section 144B of the Act along with penalty notice dated 28.12.2022 under Section 274 of the Act read with Section 217AAD (1) (i) of the Act for the Assessment Year 2021-23 are not tenable and the same are required to be quashed and set-aside.
10. Considering the facts of the case, the petition succeeds and is accordingly allowed. The impugned Assessment Order dated 23.03.2024 passed by the respondent under Section 143(3) read with Section 144B of the Act, and notice for demand under Section 156 of the Act and penalty under section 274 read with Section 217AAC of the Act, of the same date are hereby quashed and set aside.
11. The matter is remanded to the respondent – Assessing Officer to pass a fresh de novo order, in accordance with law after considering the reply of the petitioner as well as after providing an opportunity of hearing to the petitioner.
12. Such exercise shall be completed within 12 weeks from the date of receipt of copy of this order.
Rule is made absolute to the aforesaid extent. No order as to costs.
