HMA Agro Industries Limited Vs DCIT (ITAT Agra)
ITAT Agra set aside a TDS assessment order for AY 2014-15, holding that a late-night show cause notice with a 1-day deadline violated natural justice. The matter is remitted to the Assessing Officer for fresh adjudication.
The Income Tax Appellate Tribunal (ITAT) in Agra has ruled in favor of HMA Agro Industries Limited, setting aside a demand of over ₹5.16 crore related to a TDS (Tax Deducted at Source) dispute. The Tribunal’s decision was based on a fundamental principle of law: the right to a fair hearing. The case highlighted what the ITAT called an “unreasonably short span of time” for the company to respond to a show-cause notice, thereby violating the principles of natural justice.
The dispute began when the Assessing Officer (AO) determined that HMA Agro Industries had failed to deduct or had short-deducted tax at source for the assessment year 2014-15. This resulted in a demand of ₹5,16,02,434, including interest. The company’s appeal to the Commissioner of Income Tax (Appeals), or CIT(A), was dismissed, prompting a further appeal to the ITAT.
During the ITAT hearing, the company’s representative argued that both the Assessing Officer and the CIT(A) had failed to provide a reasonable opportunity for the company to present its case. The most critical piece of evidence presented was the timeline of the show-cause notice. The notice was issued by the Assessing Officer on March 25, 2021, at 9:39 p.m. and gave the company just one day to respond, setting a deadline for March 26, 2021. The final assessment order was then passed on March 30, 2021. The company’s counsel contended that it was impossible to gather the voluminous records and supporting documents required for proper verification of the TDS liability within such a brief period. The lack of thorough verification at the initial stage, it was argued, led to a miscarriage of justice.
