Facts of the Case

The present writ petition was filed challenging the Assessment Order dated 31st March 2022 passed under Sections 143(3) read with Section 153A of the Income Tax Act, 1961 for Assessment Year 2019–20.

The Assessing Officer made additions amounting to ₹14.75 crores primarily on the ground that the petitioner failed to respond to a show cause notice issued on 21st March 2022.

The said notice, running into 92 pages, was served via email around midnight and required compliance by 3:45 PM on the next day, effectively granting very limited time. The petitioner contended that the documents sought were never previously requested during assessment proceedings.

Issues Involved

  1. Whether granting less than two days to respond to a detailed 92-page show cause notice violates principles of natural justice.
  2. Whether an assessment order can be sustained when material relied upon was not previously disclosed during proceedings.
  3. Whether adequate opportunity of hearing was provided under Sections 142(1), 143(3), and 153A of the Income Tax Act, 1961.

Petitioner’s Arguments

  • The petitioner argued that the show cause notice was excessively detailed (92 pages) and introduced new requirements for documents never previously sought.
  • Prior notices issued under Section 142(1) had already been duly complied with, and none demanded the information later required.
  • The extremely short timeline (less than 1.5 days) made it impossible to provide an effective response.
  • The petitioner also attempted to seek additional time by visiting the office of the Assessing Officer, but was allegedly not entertained.

Respondent’s Arguments

  • The Revenue contended that sufficient opportunities had already been granted through multiple notices under Section 142(1).
  • It was argued that the petitioner failed to provide adequate responses earlier, necessitating the final show cause notice.
  • The respondent maintained that the petitioner neither filed a reply nor formally sought adjournment in response to the notice dated 21st March 2022.

Court’s Findings / Order

  • Granting only one and a half days to respond to a 92-page show cause notice was not sufficient in the peculiar facts of the case.
  • The notice also included depositions and materials that were not previously provided to the petitioner.
  • This amounted to a violation of the principles of natural justice.

Order:

  • The impugned assessment order dated 31st March 2022 was set aside.
  • The petitioner was granted three weeks to file a reply to the show cause notice.
  • The Assessing Officer was directed to pass a fresh reasoned order within four weeks thereafter.

Important Clarification by Court

  • The Court explicitly clarified that it had not examined the merits of the case.
  • All rights and contentions of both parties were kept open for fresh adjudication.

Sections Involved

  • Section 142(1) – Inquiry before assessment
  • Section 143(3) – Assessment
  • Section 153A – Assessment in case of search or requisition
  • Principles of Natural Justice

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:1519-DB/MMH26042022CW64172022_201309.pdf

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