Facts of the Case

The petitioner, Sanskriti Exim Pvt. Ltd., filed multiple writ petitions challenging six assessment orders dated 28.03.2023 passed by the Assessing Officer (AO) for Assessment Years 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, 1961, along with consequential demand notices under Section 156 and notices under Section 142(1).

The petitioner argued that despite being granted 30 days to file returns under Section 153C, the AO subsequently issued notices under Section 142(1) requiring submission of documents within just 2 days, leading to procedural unfairness 

Issues Involved

  1. Whether granting only 2 days to furnish information under Section 142(1) violates principles of natural justice.
  2. Whether assessment orders passed under Section 153C read with Section 144 without reasonable opportunity are valid in law.
  3. Whether inconsistency in timelines granted by the AO renders the proceedings arbitrary.

Petitioner’s Arguments

  • The petitioner contended that the AO provided an unreasonably short period of 2 days to submit voluminous information for multiple assessment years.
  • It was argued that this contradicts the earlier notice granting 30 days to file returns, making compliance practically impossible.
  • The petitioner emphasized that such action amounts to a clear breach of principles of natural justice, particularly the right to adequate opportunity of hearing.

Respondent’s Arguments

  • The Revenue proceeded with the assessment based on available records and justified the issuance of notices and completion of assessment.
  • It was argued that the proceedings were conducted within the statutory framework of the Income Tax Act.

Court’s Findings / Order

  • The AO placed the petitioner under an “extremely tight leash” by expecting compliance within an impractical timeframe.
  • Collecting and furnishing documents for six assessment years within 2 days is unreasonable by any standard.
  • There was a clear violation of principles of natural justice due to inadequate opportunity.

Final Order

  • The impugned assessment orders dated 28.03.2023 were set aside.
  • Consequently, demand notices under Section 156 were also quashed.
  • The AO was granted liberty to re-initiate proceedings from the stage of Section 142(1) notice.
  • The petitioner was granted 3 weeks to respond, and the AO was directed to provide:
    • Relevant material/documents
    • Personal hearing opportunity before passing fresh order 

Important Clarification by Court

  • Adequate opportunity must be real and effective, not merely procedural.
  • Authorities must ensure reasonable timelines, especially when multiple assessment years are involved.
  • Personal hearing and disclosure of material are essential components of fair assessment 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

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

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