Facts of the Case

The petitioner, E. Construct FZ LLC, challenged reassessment proceedings initiated by the Income Tax Department for Assessment Year 2019–20.

A notice under Section 148A(b) dated 30.03.2023 was issued requiring a response by 10.04.2023. However, the petitioner received the notice only on 14.04.2023, making it impossible to comply within the stipulated timeline.

Despite informing the Assessing Officer (AO) of this delay via communication dated 14.04.2023, the AO proceeded to pass an order under Section 148A(d) on 17.04.2023 and issued a consequential notice under Section 148, without considering the petitioner’s explanation.

Issues Involved

  1. Whether reassessment proceedings are valid when the assessee is not given a reasonable opportunity to respond.
  2. Whether non-consideration of communication explaining delay violates principles of natural justice.
  3. Whether the order under Section 148A(d) is sustainable in absence of fair hearing.

Petitioner’s Arguments

  • The notice under Section 148A(b) was served after the response deadline, making compliance impossible.
  • The petitioner duly informed the department of this procedural impossibility.
  • The AO failed to consider the explanation before passing the order.
  • Such action violates principles of natural justice, particularly the right to be heard.

Respondent’s Arguments

  • The Revenue relied on the available record and supported the reassessment proceedings.
  • It was submitted that no counter-affidavit was necessary and the matter could be decided on existing records.

Court’s Findings / Order

The Court observed that the Assessing Officer failed to consider the petitioner’s communication explaining the delay in responding due to late service of notice.

Accordingly, the Court:

  • Set aside the impugned order dated 17.04.2023 passed under Section 148A(d).
  • Granted liberty to the AO to pass a fresh order after considering the petitioner’s reply.
  • Directed the AO to:
    • Consider the reply on merits
    • Provide personal hearing
    • Pass a reasoned (speaking) order
  • Disposed of the writ petition with these directions.

Important Clarification

  • Service of notice must be effective and timely to allow meaningful compliance.
  • Passing an order without considering the assessee’s explanation amounts to procedural unfairness.
  • Even in reassessment proceedings, natural justice is mandatory.

Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/RAS11082023CW106722023_172915.pdf

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