Facts of the Case

The petitioner, Sanskriti Exim Pvt. Ltd., challenged six separate assessment orders dated 28.03.2023 passed for multiple assessment years (AYs 2014–15, 2015–16, 2016–17, 2017–18, 2018–19, and 2019–20).

The assessment orders were passed under Section 153C read with Section 144 of the Income Tax Act, along with consequential demand notices under Section 156 and notices issued under Section 142(1).

Initially, notices under Section 153C dated 16.03.2023 granted the petitioner 30 days to file returns. However, subsequent notices under Section 142(1) dated 20.03.2023 required submission of detailed information within just 2 days.

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

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 not granting adequate opportunity despite earlier granting 30 days.
  3. Whether such assessment orders and consequential demand notices are legally sustainable.

Petitioner’s Arguments

  • The petitioner contended that the AO violated principles of natural justice by providing only 2 days to respond to voluminous information requests across multiple assessment years.
  • It was argued that the timeline was unreasonable and contradictory to the earlier 30-day period granted under Section 153C.
  • The petitioner sought reasonable time to compile documents and comply with notices.

Respondent’s Arguments


  • The Revenue argued based on the available record and defended the assessment proceedings.
  • It was submitted that the proceedings were conducted as per statutory provisions.

 Court’s Findings / Order


  • The Assessing Officer placed the petitioner under an unreasonably tight timeline, expecting compliance for six assessment years within two days.
  • Such action was impractical and violative of principles of natural justice.
  • The assessment orders dated 28.03.2023 were set aside.
  • Consequently, demand notices under Section 156 also stood quashed.

 

Important Clarifications by the Court

  • The AO was granted liberty to restart proceedings from the stage of Section 142(1) notices.
  • The petitioner was directed to respond within three weeks.
  • The AO must:
    • Provide all relevant material to the petitioner
    • Grant a 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
    (Income Tax Act, 1961)

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS19052023CW67562023_133030.pdf

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