Facts of the Case

The petitioner, Ghanshyam Das Gupta, filed multiple writ petitions challenging assessment orders passed under Sections 153A and 143(3) of the Income Tax Act, 1961. The challenge also extended to 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 petitioner contended that the assessment orders dated 09th and 10th June 2021 were passed without granting an effective opportunity of hearing. It was argued that due to the COVID-19 lockdown in Delhi, the petitioner believed that the deadline to respond to notices dated 21 April 2021 had been extended indefinitely via an email communication which did not specify any timeline.

Substantial tax demands along with penalty proceedings were raised without allowing proper compliance or representation.

Issues Involved

  1. Whether the assessment orders passed without granting adequate opportunity violate principles of natural justice.
  2. Whether the petitioner was denied a fair opportunity to respond to notices under Section 142(1).
  3. Whether the circumstances of COVID-19 lockdown justified delay in compliance.
  4. Whether such assessment orders are liable to be set aside and remanded.

Petitioner’s Arguments

  • The assessment orders were passed without affording effective hearing, violating natural justice.
  • The petitioner believed that compliance deadlines were extended due to COVID-19 lockdown, based on departmental communication.
  • Lack of opportunity caused serious prejudice, resulting in substantial tax demands and penalty proceedings.
  • The petitioner possessed relevant documents and explanations which could not be presented due to lack of opportunity.

Respondent’s Arguments

  • The Revenue contended that notices dated 21 April 2021 were validly issued.
  • It was argued that the subsequent email suggesting extension was not issued by the department.
  • The department maintained that there was sufficient compliance with principles of natural justice based on original notices.

Court Findings / Judgment

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

  • Due to lockdown between 19 April 2021 and 07 June 2021, the petitioner did not get sufficient opportunity to respond.
  • Even if the respondent’s version is accepted, the opportunity provided was not reasonable or effective.
  • The petitioner had indicated possession of relevant documents, which were not considered due to lack of hearing.

Order:

  • Assessment orders dated 09 June 2021 and 10 June 2021 were set aside.
  • Matter remanded back to the Assessing Officer.
  • Direction to pass fresh reasoned order after granting proper opportunity of hearing.
  • Petitioner directed to file responses within two weeks and appear before the authority.

Important Clarification

  • The Court emphasized that even statutory compliance cannot override principles of natural justice.
  • Extraordinary circumstances like COVID-19 lockdown must be considered while evaluating procedural fairness.
  • Mere issuance of notice is not sufficient; effective opportunity must be real and meaningful.

Sections Involved

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