Facts of the Case

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

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

Due to the extremely short timeline, the petitioner sought additional time of 30 days. However, the Assessing Officer proceeded to pass assessment orders without granting the requested time.

Issues Involved

  1. Whether passing assessment orders without granting reasonable time violates principles of natural justice.
  2. Whether the Assessing Officer acted arbitrarily by requiring compliance within an impractically short period.
  3. Whether such assessment orders and consequent demand notices are legally sustainable.

Petitioner’s Arguments

  • The petitioner contended that there was a clear violation of principles of natural justice.
  • The time provided (two days) to furnish documents for multiple assessment years was unreasonable and impractical.
  • It was highlighted that earlier notice under Section 153C had granted 30 days, making the subsequent short timeline contradictory and unfair.
  • The petitioner sought adequate opportunity to respond and present relevant material.

Respondent’s Arguments

  • The Revenue argued the matter based on the existing record without filing counter affidavits.
  • It supported the validity of the assessment proceedings conducted by the Assessing Officer.

Court Findings / Order

  • The Court observed that the Assessing Officer had imposed an extremely tight timeline requiring the petitioner to compile information for six assessment years within two days.
  • Such a timeframe was held to be impractical and violative of natural justice.
  • The Court set aside the impugned assessment orders dated 28.03.2023.
  • Consequently, the demand notices issued under Section 156 were also quashed.

Important Clarifications by the Court

  • The Assessing Officer was granted liberty to conduct fresh proceedings from the stage of notice under Section 142(1).
  • The petitioner must respond within four weeks with relevant information.
  • The Assessing Officer must:
    • Provide all relevant material in his possession
    • Grant a personal hearing to the petitioner
  • Proper procedural fairness must be ensured before passing fresh orders.

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

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

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