Introduction: The Delhi High Court’s recent ruling in the case of Usha Gupta vs. ITO addresses an important aspect of income tax assessments. This article delves into the details of the case, focusing on the court’s decision to set aside the assessment order due to a procedural lapse related to a show cause notice (SCN) response.
Detailed Subheading-wise Analysis:
1. Background of the Case:
2. Challenge to Assessment Order:
3. Allegation of Natural Justice Violation:
4. The Timeline of Events:
5. Neglected Adjournment Request:
6. Portal Closure and Assessment Order:
7. Court’s Decision:
8. The Way Forward:
The case of Usha Gupta vs. ITO serves as a reminder of the significance of adhering to principles of natural justice in income tax assessments. The Delhi High Court’s decision to set aside the assessment order emphasizes the need for procedural fairness and the right of taxpayers to a reasonable opportunity to respond to show cause notices. This ruling underscores the court’s commitment to upholding justice and ensuring that taxpayers are treated fairly in income tax proceedings.
HC set aside the assessment order emphasizes the need for procedural fairness and the right of taxpayers to a reasonable opportunity to respond to show cause notices
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Allowed, subject to just exceptions
W.P.(C) 11410/2023 & CM Appl. 44400/2023 [Application filed on behalf of the petitioner seeking interim relief].
2. Issue notice.
2.1 Mr Sanjay Kumar, learned senior standing counsel, accepts notice on behalf of the respondents/revenue.
3. Given the order that we propose to pass, Mr Kumar says that he does not wish to file a counter-affidavit in the matter and he will argue the matter, based on the record presently available with the court. Therefore, with the consent of the learned counsels for the parties, the writ petition is taken up for hearing and final disposal at this stage itself.
4. This writ petition concerns Assessment Year (AY) 2013-14.
5. The petitioner seeks to assail the assessment order, dated 18.05.2023, passed under Section 147 read with 144B of the Income Tax Act, 1961 [in short, “The Act”].
6. Mr Nitin Gulati, learned counsel, who appears on behalf of the petitioner, confines his challenge, at this juncture, only to the infraction of principles of natural justice.
7. It is pointed out that the show cause notice dated 08.05.2023 (SCN), was served on the petitioner proposing a variation of taxable income.
8. Via the SCN, the petitioner was granted time to file a response by 10.05.2023 (15:46 hours).
9. The petitioner made a request on the very next date i.e., 09.05.2023, for adjournment. The petitioner sought adjournment till 18.05.2023. The reason given by the petitioner for seeking adjournment was that she had to gather material to respond to the SCN.
10. It is the petitioner’s case that the request was not dealt with and on 18.05.2023 when she attempted to upload her response, she could not do so as the designated portal had been closed.
11. These facts are not in dispute.
12. The assessment order, as indicated above, was passed on 18.05.2023.
13. Without making any observations on the merits of the matter, we are inclined to set aside the assessment order, as this would be the best way forward.
13.1 It is ordered accordingly.
14. Liberty is, however, granted to the Assessing Officer (AO) to pass a fresh assessment order after giving an opportunity to the petitioner.
15. Mr Gulati says that the petitioner will file a response within the next three (3) weeks.
16. The AO will ensure that the portal is opened for the petitioner to upload its reply.
17. Furthermore, the petitioner is also given liberty to transmit a copy of the reply to the Jurisdictional Assessing Officer (JAO) via email.
18. The AO will, thereafter, issue a notice to the petitioner for personal hearing. The notice will indicate the date and time when the hearing will take place.
18.1 Needless to add, the AO will, thereafter, pass a speaking order.
19. The writ petition is disposed of, in the aforesaid terms.
20. Consequently, the pending interlocutory applications shall stand closed.
21. Parties will act based on the digitally signed copy of the order.