Facts of the Case

The petitioner challenged assessment orders passed under Sections 153A and 143(3), along with consequential demand notices under Section 156 and penalty notices under Section 274 read with Section 271(1)(c) for Assessment Years 2013–14 to 2019–20.

The grievance of the petitioner was that the assessment orders dated 09 June 2021 and 10 June 2021 were passed without granting an effective opportunity of hearing, thereby violating the principles of natural justice.

The petitioner contended that he was under a bona fide belief that the time to respond to notices dated 21 April 2021 had been extended indefinitely due to a communication sent via email amid COVID-19 lockdown conditions in Delhi.

Issues Involved

  1. Whether the assessment orders were passed in violation of principles of natural justice.
  2. Whether sufficient opportunity was provided to the petitioner to respond to notices under Section 142(1).
  3. Whether the impugned orders and consequential proceedings are liable to be set aside due to lack of fair hearing.

Petitioner’s Arguments

  • The impugned assessment orders were passed without affording a proper and effective opportunity of hearing.
  • The petitioner relied on an email communication dated 21 April 2021, which allegedly did not specify a deadline, leading to a reasonable belief that the response timeline stood extended.
  • Due to the COVID-19 lockdown in Delhi, the petitioner was unable to respond adequately.
  • Substantial financial demands and penalty proceedings were initiated without giving a fair chance to present relevant documents and explanations.

Respondent’s Arguments

  • The Revenue contended that valid notices dated 21 April 2021 had been issued.
  • It was argued that the subsequent email relied upon by the petitioner was not issued by the department.
  • The respondent submitted that if the original notices were considered, there was sufficient compliance with principles of natural justice.

Court Findings / Order

  • The Court held that the principles of natural justice were not adequately complied with.
  • It observed that even as per the respondent’s version, the petitioner did not get sufficient opportunity to respond, especially considering the lockdown period in Delhi.
  • The Court noted that the petitioner had detailed documents which he intended to place on record but was deprived of the opportunity.

Order:

  • The impugned assessment orders dated 09 June 2021 and 10 June 2021 were set aside.
  • The matter was remanded back to the Assessing Officer for fresh adjudication.
  • The Assessing Officer was directed to pass a reasoned order after providing proper opportunity of hearing.
  • The petitioner was directed to file responses within two weeks and appear before the Assessing Officer on 26 July 2021.

Important Clarification

  • The judgment reinforces that even procedural compliance must ensure effective opportunity of hearing, not merely issuance of notices.
  • External circumstances like COVID-19 lockdown must be considered while evaluating compliance with natural justice.
  • Assessment proceedings conducted without fair opportunity are liable to be quashed.

Sections Involved

  • Section 142(1), Income Tax Act, 1961
  • Section 153A, Income Tax Act, 1961
  • Section 143(3), Income Tax Act, 1961
  • Section 156, Income Tax Act, 1961
  • Section 271(1)(c) read with Section 274, Income Tax Act, 1961

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2021:DHC:2014-DB/MMH09072021CW62782021_093041.pdf


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