Facts of the Case

The present writ petitions were filed challenging 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 (AYs), namely AY 2013-14, 2014-15, 2015-16, 2016-17, 2017-18, 2018-19 and 2019-20.

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.

Despite requesting reasonable time, the Assessing Officer proceeded to pass assessment orders without granting adequate opportunity to the petitioner. 

Issues Involved

  1. Whether passing assessment orders within an unreasonably short time violates principles of natural justice.
  2. Whether the Assessing Officer acted arbitrarily by curtailing the time granted earlier under Section 153C.
  3. Validity of assessment orders passed under Section 153C read with Section 144 and consequential demand notices under Section 156.

Petitioner’s Arguments

  • The petitioner contended that there was a clear breach of principles of natural justice.
  • Although 30 days’ time was granted under Section 153C, only two days were given under Section 142(1) to furnish detailed information for multiple assessment years.
  • The time granted was impractical and unreasonable, especially considering the volume of data required.
  • The Assessing Officer failed to consider the request for extension of time.

Respondent’s Arguments

  • The Revenue argued the matter based on the existing record and justified the assessment proceedings.
  • It was contended that sufficient opportunity had been granted in accordance with statutory provisions. 

Court’s Findings / Order

  • The Court held that the Assessing Officer placed the petitioner under an “extremely tight leash” by requiring compliance within two days for six assessment years.
  • Such a timeline was held to be impractical and unreasonable.
  • The Court observed that once 30 days were granted under Section 153C, the subsequent curtailment of time violated fairness.

Order:

  • The impugned assessment orders dated 28.03.2023 were set aside.
  • Consequential demand notices under Section 156 were also quashed.
  • The matter was remanded to the Assessing Officer for fresh consideration from the stage of notice under Section 142(1).
  • The petitioner was granted four weeks to respond.
  • The Assessing Officer was directed to:
    • Provide all relevant material to the petitioner
    • Grant a personal hearing before passing fresh orders

Important Clarification

  • The Court did not quash the notice issued under Section 142(1).
  • Fresh proceedings were permitted, ensuring compliance with principles of natural justice.
  • The ruling emphasizes that procedural fairness is mandatory even in income tax proceedings.

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
  • Principles of Natural Justice


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

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