Facts of the Case

The petitioner, Sanskriti Exim Pvt. Ltd., filed multiple writ petitions before the Delhi High Court challenging six separate assessment orders dated 28.03.2023 passed under Section 153C read with Section 144 of the Income Tax Act, 1961 for Assessment Years 2014–15, 2015–16, 2016–17, 2017–18, 2018–19, and 2019–20.

Additionally, the petitioner challenged:

  • Demand notices issued under Section 156 of the Act dated 28.03.2023
  • Notices issued under Section 142(1) dated 20.03.2023

The petitioner contended that the assessment proceedings were conducted in violation of the principles of natural justice.

Issues Involved

  1. Whether the assessment orders passed under Section 153C read with Section 144 are valid when inadequate time was granted to the assessee.
  2. Whether issuing notices under Section 142(1) with an extremely short compliance period violates principles of natural justice.
  3. Whether consequential demand notices under Section 156 can survive if the assessment orders are invalid.

Petitiner’s Arguments

  • The petitioner argued that although notices under Section 153C granted 30 days to file returns, subsequent notices under Section 142(1) required submission of documents within only two days.
  • Such a short timeframe made compliance practically impossible, especially across multiple assessment years.
  • Despite requesting additional time, the Assessing Officer proceeded to pass the assessment orders without granting a reasonable opportunity.
  • This amounted to a clear breach of principles of natural justice.

Respondent’s Arguments

  • The Revenue proceeded with the assessment based on available records.
  • It was argued that the process adopted was sufficient for completion of assessment.
  • The respondent did not insist on filing counter-affidavits and agreed to argue based on existing records.

Court Order / Findings

  • The Assessing Officer placed the petitioner under an unreasonably restrictive timeline, expecting compliance for six assessment years within two days.
  • This was impractical and unjust, especially when 30 days had initially been granted under Section 153C.
  • The conduct of the Assessing Officer amounted to a violation of principles of natural justice.
  • The impugned assessment orders dated 28.03.2023 were set aside.
  • The demand notices under Section 156 were also quashed as a consequence.

Important Clarification by the Court

  • The matter was remanded back to the Assessing Officer.
  • The proceedings were restored from the stage of notice under Section 142(1).
  • The petitioner was granted three weeks to respond.
  • The Assessing Officer was directed to:
    • Provide all relevant material to the petitioner
    • Grant a personal hearing before proceeding further

Sections Involved

  • Section 153C – Assessment of income of any other person
  • Section 142(1) – Inquiry before assessment
  • Section 144 – Best judgment assessment
  • Section 156 – Notice of demand
  • Principles of Natural Justice (Judicial Doctrine)

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS19052023CW67562023_133030.pdf

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