Facts of the Case

The petitioner challenged multiple assessment orders passed under Sections 153A and 143(3) of the Income Tax Act, 1961, along with demand notices issued under Section 156 and penalty notices under Section 274 read with Section 271(1)(c). These orders pertained to Assessment Years 2013–14 to 2019–20.

The petitioner contended 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.

It was further stated that due to a communication sent via email on 21 April 2021, which did not specify any deadline, the petitioner believed that the time for filing responses stood extended indefinitely, especially considering the COVID-19 lockdown in Delhi.

Issues Involved

  1. Whether the assessment orders were passed in violation of the principles of natural justice.
  2. Whether the petitioner was denied a fair and effective opportunity to respond to notices under Section 142(1).
  3. Whether the ambiguity in the communication regarding extension of time justified the petitioner’s non-response.

Petitioner’s Arguments

  • The impugned assessment orders were passed without granting an effective hearing.
  • The petitioner was under a bona fide belief that the response deadline was extended due to an email communication dated 21 April 2021.
  • The COVID-19 lockdown in Delhi prevented timely compliance.
  • Failure to provide an opportunity to respond caused serious prejudice, resulting in substantial tax demands and initiation of penalty proceedings.

Respondent’s Arguments

  • The respondent contended that the original notices dated 21 April 2021 were validly issued.
  • It was argued that the subsequent email (claiming extension) was not issued by the department.
  • The respondent maintained that sufficient opportunity had already been granted, and principles of natural justice were complied with.

Court Findings / Order

The Delhi High Court observed that the principles of natural justice were not adequately complied with.

  • Due to the lockdown period (19 April 2021 to 07 June 2021), the petitioner did not have sufficient opportunity to respond.
  • Even if the respondent’s version is accepted, the petitioner lacked adequate opportunity to reply to notices under Section 142(1).
  • The petitioner had indicated possession of relevant documents that could have clarified the issues if an opportunity had been granted.

Final 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.
  • The Assessing Officer was directed to pass fresh orders after granting 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

  • Even procedural compliance must meet the standard of effective opportunity of hearing.
  • External circumstances like COVID-19 lockdown must be considered while evaluating compliance.
  • Any ambiguity in departmental communication affecting taxpayer rights must be interpreted cautiously to avoid prejudice.

Sections Involved

  • Section 153A – Assessment in case of search or requisition
  • Section 143(3) – Regular assessment
  • Section 142(1) – Inquiry before assessment
  • Section 156 – Notice of demand
  • Section 271(1)(c) – Penalty for concealment
  • Section 274 – Procedure for penalty

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


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