Facts of the Case

The petitioner challenged the reassessment order dated 29 September 2021 passed under Section 147 read with Section 144 of the Income Tax Act for AY 2013–14 along with the consequential demand notice under Section 156. The reassessment proceedings were initiated pursuant to a notice under Section 148 dated 19 March 2020.

The petitioner contended that reasons for reopening were supplied after an inordinate delay of about one and a half years and immediately thereafter, notices under Sections 142(1) and 143(2) were issued requiring response within a very short period.

The assessment order was passed within a few days of initiating final proceedings, leaving insufficient opportunity for response.

Issues Involved

  1. Whether delay in furnishing reasons for reopening violates the law laid down in GKN Driveshafts case.
  2. Whether passing reassessment order without granting reasonable opportunity violates principles of natural justice.
  3. Whether such reassessment order is liable to be quashed.

Petitioner’s Arguments

  • Reasons for reopening were not furnished within reasonable time as mandated by the Supreme Court.
  • No effective opportunity was provided to file objections before completion of reassessment.
  • Proceedings were concluded in an unduly hurried manner just before limitation expiry.
  • Reliance placed on Sona Builders v. UOI (2001) 251 ITR 197, emphasizing that inadequate time violates fairness.

Respondent’s Arguments

  • The delay was attributable to procedural aspects involving the National Faceless Assessment Centre.
  • The reassessment order was passed within limitation period after issuing statutory notices.

Court Findings / Order

  • The Court held that delay in furnishing reasons was attributable to the department and not the assessee.
  • It was observed that the petitioner was not granted reasonable time to file objections.
  • This amounted to violation of principles of natural justice.

Final Order

  • Reassessment order dated 29 September 2021 was quashed.
  • Petitioner was allowed to file objections within one week.
  • Assessing Officer directed to pass a reasoned order after considering objections.

Important Clarifications

  • Furnishing of reasons must be timely and meaningful.
  • Assessee must be given adequate opportunity to object before reassessment.
  • Limitation pressure cannot justify violation of natural justice.
  • Compliance with GKN Driveshafts procedure is mandatory.

Link to download the order -  https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:852-DB/MMH07032022CW125712021_194918.pdf

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