Facts of the Case

The petitioner challenged multiple assessment orders dated 28.03.2023 passed for different assessment years (AY 2013–14 to AY 2019–20) under Section 153C read with Section 144 of the Income Tax Act, 1961.

Initially, notices under Section 153C were issued granting 30 days to file returns. Subsequently, notices under Section 142(1) were issued on 20.03.2023 requiring submission of documents within two days.

The petitioner requested additional time citing insufficiency of the timeline. However, the Assessing Officer proceeded to pass assessment orders without granting such opportunity.

Issues Involved

  1. Whether passing assessment orders within an extremely short response period violates principles of natural justice.
  2. Whether the Assessing Officer acted arbitrarily in denying reasonable opportunity to the assessee.
  3. Validity of assessment orders passed under Section 153C r/w Section 144 without adequate hearing.

Petitioner’s Arguments

  • The timeline of two days to furnish documents for multiple assessment years was unreasonable and arbitrary.
  • The petitioner had already been granted 30 days under Section 153C, which was contradicted by the subsequent short notice.
  • Denial of sufficient opportunity amounted to a clear breach of principles of natural justice.
  • The assessment orders were liable to be quashed due to procedural unfairness.

Respondent’s Arguments

  • The Revenue proceeded on the basis of available records.
  • It was contended that the proceedings were valid and could be sustained without further delay.
  • However, no strong justification was provided for restricting the response time to two days. 

Court’s Findings / Order

  • The Court observed that requiring the petitioner to furnish information for six assessment years within two days was wholly impractical.
  • It held that such action placed the assessee under an “extremely tight leash”, violating principles of natural justice.
  • The Court set aside the assessment orders dated 28.03.2023.
  • Consequently, the demand notices issued under Section 156 were also quashed.
  • The matter was remanded back to the Assessing Officer for fresh consideration.

Important Clarifications by the Court

  • Proceedings shall restart from the stage of notice under Section 142(1).
  • The petitioner must submit responses within four weeks.
  • The Assessing Officer must:
    • Provide all relevant material to the petitioner
    • Grant a personal hearing before passing fresh orders
  • The Court emphasized strict adherence to fair hearing principles.

 

  • Adequate opportunity of hearing is mandatory in assessment proceedings.
  • Even in income tax proceedings, procedural fairness cannot be compromised for administrative convenience.
  • Orders passed in haste without reasonable opportunity are liable to be quashed.

Sections Involved

  • Section 153C – Assessment of income of any other person
  • Section 144 – Best Judgment Assessment
  • Section 142(1) – Inquiry before assessment
  • Section 156 – Notice of Demand

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS19052023CW68182023_182439.pdf

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