Facts of the Case

The petitioner challenged multiple assessment orders dated 28.03.2023 passed under Sections 153C read with 144 of the Income Tax Act for several assessment years.

Initially, notices dated 14.03.2023 under Section 153C granted the petitioner 30 days to file returns. Subsequently, fresh notices dated 20.03.2023 under Section 142(1) required submission of documents within only two days.

The petitioner requested reasonable time to respond; however, the Assessing Officer proceeded to pass assessment orders without granting such 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 reducing response time from 30 days to 2 days.
  3. Validity of assessment orders and consequential demand notices issued under Section 156.

Petitioner’s Arguments

  • The drastic reduction of time from 30 days to 2 days was unreasonable and arbitrary.
  • Adequate opportunity to present documents and explanations was denied.
  • The assessment orders were passed in violation of principles of natural justice.
  • The action of the Assessing Officer caused serious prejudice to the petitioner.

Respondent’s Arguments

  • The Revenue contended that proceedings were valid and based on available records.
  • It was argued that sufficient opportunity had been provided through statutory notices.
  • The Revenue sought to justify the assessment orders without filing counter-affidavits.

Court’s Findings

  • The Court observed that requiring compliance within two days for multiple assessment years was impractical and unreasonable.
  • It noted inconsistency where the department initially granted 30 days but later curtailed it drastically.
  • Such action was held to be a clear violation of principles of natural justice.
  • The Assessing Officer placed the petitioner under an “extremely tight leash,” making compliance impossible.

Court Order

  • The impugned assessment orders dated 28.03.2023 were set aside.
  • Consequential demand notices issued under Section 156 were also quashed.
  • The matter was remanded to the Assessing Officer for fresh adjudication.

Important Clarifications by Court

  • Proceedings to continue from the stage of notice under Section 142(1).
  • Petitioner to be given four weeks to respond.
  • Assessing Officer must:
    • Provide all relevant material to the petitioner
    • Grant a personal hearing 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
    (Income Tax Act, 1961)

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

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