Facts of the Case

The petitioner, Pratyaksh Apparels Pvt. Ltd., challenged multiple assessment orders passed by the respondent authority for different Assessment Years (AY 2013-14 to AY 2019-20). These assessment orders were all dated 28.03.2023 and were passed under Section 153C read with Section 144 of the Income Tax Act, 1961.

The petitioner was initially issued notices dated 14.03.2023 under Section 153C, granting 30 days to file returns. Subsequently, notices dated 20.03.2023 under Section 142(1) required submission of documents within an extremely short period of two days (by 22.03.2023).

Despite requesting reasonable time (30 days), the Assessing Officer proceeded to pass assessment orders without granting adequate opportunity.

Issues Involved

  1. Whether passing assessment orders without granting reasonable time violates principles of natural justice.
  2. Whether the Assessing Officer acted arbitrarily by providing contradictory timelines (30 days vs 2 days).
  3. Validity of assessment orders passed under Section 153C read with Section 144 in absence of fair opportunity.
  4. Legality of consequent demand notices issued under Section 156.

Ptitioner’s Arguments

  • The petitioner contended that the Assessing Officer failed to provide a fair and reasonable opportunity to respond.
  • It was argued that although 30 days were initially granted under Section 153C, the subsequent notice under Section 142(1) curtailed the time to just two days, making compliance impractical.
  • The petitioner emphasized that such short timelines amounted to a clear breach of principles of natural justice.
  • It was further submitted that adequate time was requested but not granted before passing the impugned orders.

Respondent’s Arguments

  • The respondent proceeded on the basis of available records and justified the assessment orders.
  • It was submitted that the proceedings were conducted as per statutory provisions and that counter affidavits were not necessary for adjudication at this stage.

Court’s Findings / Order

  • The Court observed that requiring the petitioner to furnish details for six assessment years within two days was unreasonable and impractical.
  • It was held that the Assessing Officer had placed the petitioner under an “extremely tight leash,” thereby violating principles of natural justice.
  • The Court set aside all the impugned assessment orders dated 28.03.2023.
  • Consequently, the demand notices issued under Section 156 also stood quashed.

Important Clarifications by the Court

  • Liberty was granted to the Assessing Officer to initiate fresh proceedings from the stage of notice dated 20.03.2023 under Section 142(1).
  • The petitioner was directed to respond within four weeks.
  • The Assessing Officer must:
    • Provide all relevant material in its possession to the petitioner
    • Grant a proper 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 (Audi Alteram Partem)

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

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