Facts of the Case

The petitioner, APHV India Investco Private Limited, filed multiple writ petitions challenging assessment orders, draft assessment orders, demand notices, and penalty orders for Assessment Years 2015–16 and 2016–17.

The Revenue claimed that several notices under Sections 148 and 142(1) were issued between March 2021 and July 2022. However, the petitioner contended that it received only one notice dated 12.07.2022.

The petitioner responded via email on 20.07.2022 requesting additional time and clarifying non-receipt of earlier notices. Due to technical issues with the income tax portal (password reset complications involving foreign contact details), the petitioner could not upload responses on the portal but communicated via email.

Despite this, the Assessing Officer proceeded to pass:

  • Draft Assessment Order (26.07.2022)
  • Final Assessment Order (10.09.2022)
  • Demand Notices
  • Penalty Orders under Section 271(1)(c)

Issues Involved

  1. Whether the assessment proceedings were conducted in violation of principles of natural justice.
  2. Whether non-consideration of the petitioner’s reply invalidates the assessment order.
  3. Whether granting inadequate time under Section 142(1) vitiates proceedings.
  4. Whether consequential penalty orders can survive if assessment orders are invalid.

Petitioner’s Arguments

  • The petitioner did not receive earlier notices except the one dated 12.07.2022.
  • A reply dated 20.07.2022 was duly submitted seeking extension of time.
  • The inability to upload responses was due to genuine technical issues with the income tax portal.
  • The Assessing Officer ignored the reply and incorrectly recorded non-compliance.
  • Only 3 days were given to respond, violating procedural fairness and CBDT SOP guidelines.

Respondent’s Arguments

  • Notices were duly issued and served through official communication channels.
  • The petitioner failed to properly respond within the stipulated timeline.
  • Assessment was conducted based on available material due to non-compliance.

Court’s Findings / Order

1. Non-Application of Mind

The Assessing Officer failed to consider the petitioner’s email reply dated 20.07.2022, which:

  • Requested time extension
  • Provided relevant clarifications

This amounted to non-application of mind, rendering the assessment invalid.

2. Violation of Natural Justice

  • Only 3 days’ time was granted to respond to notice under Section 142(1)
  • This violated principles of natural justice (jus naturale)
  • Also breached CBDT SOP requiring reasonable time (normally 15 days)

3. Invalid Assessment Proceedings

Due to procedural lapses:

  • Draft Assessment Orders
  • Final Assessment Orders
  • Demand Notices
    were set aside

4. Penalty Orders Also Set Aside

Since penalty orders were consequential, they were also quashed.

5. Matter Remanded

The case was remanded to the Assessing Officer with directions to:

  • Issue fresh notices
  • Provide fair opportunity of hearing
  • Proceed in accordance with law

Important Clarification by the Court

  • Even in digital/online compliance regimes, procedural fairness cannot be compromised.
  • Authorities must consider all replies, including those submitted via email.
  • Adequate time for compliance is mandatory, not discretionary

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/60806092023CW142242022_155117.pdf

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