GI. Retail Pvt. Ltd. Vs ITO (Madras High Court)
Madras High Court has stepped in to provide relief to GI. Retail Pvt. Ltd., a taxpayer caught in a procedural tangle involving show-cause notices issued by both a faceless assessment officer and a jurisdictional assessing officer. The court, acknowledging the genuine “perplexed state” of the assessee, has granted a two-week window to file a reply and directed a personal hearing, overriding the tax department’s expedited timeline.
The case arose from a show-cause notice dated March 12, 2025, issued by the jurisdictional Assessing Officer (first respondent) under Section 144(8) of the Income Tax Act, 1961. This followed an earlier show-cause notice dated February 28, 2025, issued by a faceless Assessing Officer (second respondent). The petitioner contended that while faceless proceedings were ongoing, the case was abruptly and arbitrarily transferred to the jurisdictional officer without any intimation or reason, leaving them unsure which notice to respond to. Despite a request for one month to file a reply, the jurisdictional officer granted only two working days, citing the approaching time-barring date of March 31, 2025, and scheduled a personal hearing for March 24, 2025. This prompted GI.Retail Pvt. Ltd. to approach the High Court, seeking to quash the jurisdictional officer’s notice on grounds of lacking jurisdiction and non-adherence to mandatory procedures.
The learned Standing Counsel for the Income Tax Department argued that the petitioner’s confusion was unfounded. They explained that the initial notice from the faceless officer was followed by an immediate transfer of the case to the jurisdictional officer on the same day. The subsequent notice from the jurisdictional officer explicitly referenced the earlier faceless notice, indicating the transfer of jurisdiction. Therefore, the department maintained that the petitioner should have been aware of which notice required a response.
After considering the arguments, the High Court acknowledged the department’s position that the transfer was indicated and referenced. However, it still recognized the potential for confusion from receiving multiple notices from different authorities in a seemingly overlapping manner. While the court did not quash the show-cause notice from the jurisdictional officer, it opted to grant the petitioner a fair opportunity to present their case. The court directed GI.Retail Pvt. Ltd. to file a reply to the jurisdictional officer’s show-cause notice within two weeks from the date of receiving the court’s order. Furthermore, the court mandated that the jurisdictional officer must then issue a clear 14-day notice, providing an opportunity for a personal hearing to the petitioner before deciding the matter in accordance with the law.
This case highlights the complexities that can arise during the transition to and implementation of faceless assessment regimes, a significant reform aimed at increasing transparency and efficiency in tax administration. While the Faceless Assessment Scheme under Section 144B of the Income Tax Act, 1961, seeks to eliminate human interaction and ensure random allocation of cases, instances of procedural overlap or lack of clear communication can still lead to taxpayer difficulties. Judicial precedents, though not explicitly cited in this brief order, often lean towards ensuring that taxpayers are afforded a fair opportunity to present their case and that no undue prejudice is caused by administrative complexities. The court’s directive for an extended period to reply and a personal hearing underscores this principle, aiming to prevent a time-barred assessment without adequate taxpayer representation.
The court also addressed the concern raised by the petitioner’s counsel regarding the time-barring date of March 31, 2025. While acknowledging the short timeline, the court noted that an extended period of limitation might be available to the department in such circumstances, effectively providing a safeguard against the assessment becoming time-barred due to the court’s intervention. This decision emphasizes the judiciary’s role in ensuring procedural fairness even within the ambit of stringent tax compliance deadlines.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Heard learned counsel appearing for the petitioner and Mr. D. Prabhu Mukunth Arunkumar, learned Standing Counsel who takes notice on behalf of the respondent. With consent, the main Writ Petition is taken up for final disposal at the stage of admission itself.
2. The challenge in this Writ Petition is to the show cause notice dated 12.03.2025, issued under Section 144 (8) of the Income Tax Act, 1961 by the first respondent and to quash the same.
3. The learned counsel for the petitioner would submit that prior to the issuance of the impugned show cause notice by the first respondent/jurisdictional Assessing Officer, dated 12.03.2025 the second respondent/faceless Assessing Officer has already issued a show cause notice dated 28.02.2025 and when the faceless proceedings were going on, the second respondent abruptly and arbitrarily transferred the case to the first respondent/jurisdictional officer, without any intimation or communication to the petitioner stating the reason for transfer, therefore, the petitioner was in a perplexed state as to which show cause notice, he is required to file reply; that though the petitioner, vide their letter dated 19.03.2025, requested the first respondent to give one month to file response/reply, but the first respondent granted only two working days to file reply and fixed the personal hearing on 24.03.2025 on the pre-text that the case would become time barred on 31.03.2025, which necessitated the petitioner to approach this Court seeking to quash the show cause notice dated 12.03.2025 issued by the first respondent on the ground that the same lacks jurisdiction and issued without any authority of law and without following the mandatory procedures. Thus, by averring so, the learned counsel prayed for allowing the Writ Petition.
4. Per contra, the learned Standing Counsel for the respondents would submit that initially, a show caused notice dated 28.02.2025 was issued on 28.02.2025, however, since the said show cause notice dated 28.02.2025 was issued by the second respondent, who is Faceless Assessment Officer, on the very same date, the petitioner’s case was transferred to the first respondent, who is a jurisdictional Assessing Officer, who sent a show cause notice dated 12.03.2025, wherein, a reference was made to the earlier show cause notice issued by the second respondent, Faceless Assessing Officer dated 28.02.2025, and therefore, the contention of the petitioners that the petitioner was totally perplexed as to which show cause notice, they have to file reply is baseless. Hence, the learned Standing Counsel for dismissal of the Writ Petition as being devoid of merits.
5. I have given due considerations to the submissions made on either side and perused the materials available on record.
6. It is no doubt true that initially, a show cause notice dated 28.02.2025 was issued by the second respondent, however, since the said show cause notice was issued by a faceless Assessing Officer, the case was transferred to the file of the jurisdictional Assessing Officer, viz., the first respondent, who issued the impugned show cause notice dated 12.03.2025, and called for reply/objections from the petitioner. In the said show cause notice itself, a reference was made to the show cause notice issued by the Faceless Assessment Officer dated 28.02.2025, stating that the case of the petitioner has been transferred to the jurisdictional/Assessing Officer, first respondent, therefore, the contention of the petitioner that the petitioner got perplexed as to which show cause notice, they have to file reply/objection is baseless, as rightly pointed out by the learned Standing Counsel for the respondent.
6.1 In view of the above, though this Court is not inclined to entertain the Writ Petition, however, grants liberty to the petitioner to file reply to the show cause notice issued by the first respondent, Jurisdictional Assessing Officer, dated 12.03.2025, which is impugned herein within a period of two weeks from the date of receipt of a copy of this order. Thereafter, the first respondent is directed to consider the reply and shall issue a clear 14 days notice affording an opportunity of personal hearing to the petitioner and shall decide the matter in accordance with law.
6.2 The learned counsel appearing for the petitioner though mentioned before this Court that 31.03.2025 is the last date for passing final order, and hence, sought for issuance of the order copy by today itself, since such a request is made at the eleventh hour, the learned Standing Counsel for the respondent-Department is directed to inform the respondent-Department about the order passed by this Court immediately. However, the extended period of limitation is available to the respondent to extend the period of stay in the present case.
7. The Writ Petition is disposed of accordingly. No costs. Consequently, connected Miscellaneous Petitions are closed.
