Facts of the Case

The petitioner challenged the assessment order dated 24.05.2023 concerning Assessment Year 2013–14.

A show-cause notice (SCN) dated 05.05.2023 was issued requiring the petitioner to respond by 08.05.2023. The petitioner sought additional time through a communication dated 10.05.2023 and subsequently filed its reply on 11.05.2023.

However, the Assessing Officer (AO) passed the assessment order without considering the request for extension or the reply submitted by the petitioner.

Issues Involved

  1. Whether failure to grant minimum statutory time to respond to a show-cause notice violates principles of natural justice.
  2. Whether non-consideration of the petitioner’s reply amounts to procedural illegality.
  3. Whether the assessment order is liable to be set aside for violation of Section 144B(6)(xi) of the Income Tax Act, 1961.

Petitioner’s Arguments

  • The SCN did not provide the mandatory minimum period of seven days as required under the Standard Operating Procedure (SOP).
  • The Assessing Officer failed to consider the request for adjournment and the reply filed by the petitioner.
  • Reliance was placed on the judgment in Indo Laminates Pvt. Ltd. v. Assessment Unit, Income Tax Department & Ors., where similar procedural lapses led to quashing of assessment orders.

Respondent’s Arguments

  • The Revenue contended that the petitioner failed to submit its reply within the stipulated time (08.05.2023).
  • It was argued that since the reply was filed after the deadline, the AO was justified in proceeding with the assessment.

Court Findings / Order

The Delhi High Court held:

  • There was a clear violation of Section 144B(6)(xi) and the SOP requiring a minimum seven-day period for response.
  • The Assessing Officer failed to consider the petitioner’s reply and request for extension.
  • Such action amounted to a breach of principles of natural justice.

Order

  • The impugned assessment order dated 24.05.2023 was set aside.
  • Consequential demand and penalty notices were also quashed.
  • Liberty was granted to the Assessing Officer to conduct a de novo assessment in accordance with law.

Important Clarification

  • The Court reaffirmed that procedural fairness is mandatory in faceless assessment proceedings.
  • Even where a taxpayer delays submission, authorities must ensure compliance with minimum statutory timelines.
  • SOPs framed under the Income Tax Act carry binding effect when aligned with statutory provisions.

Sections Involved

  • Section 144B(6)(xi), Income Tax Act, 1961 – Mandates minimum time for response in faceless assessments
  • Principles of Natural Justice (Audi Alteram Partem)

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS31072023CW99702023_114845.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.