Facts of the Case

The petitioner, Sanskriti Exim Pvt. Ltd., challenged six assessment orders dated 28.03.2023 passed for different assessment years under Section 153C read with Section 144 of the Income Tax Act.

The petitioner also challenged:

  • Notices issued under Section 142(1) dated 20.03.2023
  • Demand notices under Section 156 dated 28.03.2023

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

The petitioner requested reasonable time, but the Assessing Officer proceeded to pass assessment orders without granting such opportunity.

Issues Involved

  1. Whether passing assessment orders without granting adequate time violates principles of natural justice.
  2. Whether contradictory timelines (30 days vs. 2 days) render assessment proceedings arbitrary.
  3. Whether such assessments under Sections 153C/144 can sustain when proper opportunity is denied.

Petitioner’s Arguments

    • Adequate opportunity was not granted to respond to notices.
    • The requirement to submit documents within 2 days for multiple assessment years was unreasonable and impractical.
    • The Assessing Officer ignored the earlier grant of 30 days under Section 153C.
    • The action amounted to a clear breach of principles of natural justice.

Respondent’s Arguments

  • The Revenue argued the matter based on available records without filing counter affidavits.
  • It supported the validity of the assessment orders and proceedings conducted by the Assessing Officer.

 

Court’s Findings / Order

  • The Assessing Officer placed the petitioner under an extremely tight and impractical timeline.
  • Expecting compliance for six assessment years within 2 days was unreasonable.
  • There was inconsistency between:
    • 30 days granted under Section 153C
    • 2 days granted under Section 142(1)

Order:

  • Assessment orders dated 28.03.2023 were set aside.
  • Demand notices under Section 156 were also quashed.
  • Matter remanded back to the Assessing Officer for fresh proceedings.
  • Petitioner granted 3 weeks to respond.
  • AO directed to:
    • Provide relevant material to the petitioner
    • Grant personal hearing before proceeding further

Important Clarification by Court

  • Notices under Section 142(1) were not quashed, but proceedings were restored to that stage.
  • The Court emphasized that reasonable opportunity and fairness are essential in assessment proceedings.

Authorities must ensure procedural consistency and fairness while exercising statutory powers.

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

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.