Facts of the Case

The petitioner, Ghanshyam Das Gupta, filed multiple writ petitions challenging the validity of assessment orders passed under Sections 153A and 143(3) of the Income Tax Act, 1961, along with consequential notices of demand 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 09.06.2021 and 10.06.2021 were passed without granting him a proper opportunity of being heard. He believed that the time for filing responses to notices dated 21.04.2021 had been extended indefinitely due to an email communication issued during the COVID-19 lockdown period in Delhi.

Due to this misunderstanding and lack of clarity in communication, the petitioner did not submit his response, leading to substantial tax demands and initiation of penalty proceedings.

Issues Involved

  1. Whether the assessment orders passed under Sections 153A and 143(3) violated the principles of natural justice.
  2. Whether sufficient opportunity of hearing was granted to the petitioner under Section 142(1) of the Income Tax Act.
  3. Whether the ambiguity in communication during the COVID-19 lockdown justified non-compliance by the petitioner.

Petitioner’s Arguments

  • The assessment orders were passed without providing effective opportunity of hearing, thereby violating natural justice.
  • The petitioner relied on an email dated 21.04.2021 which did not specify any deadline, creating a bona fide belief that the time for response was extended indefinitely due to lockdown.
  • The petitioner suffered prejudice as substantial tax demands were raised without considering his documents and explanations.
  • He asserted that he possessed multiple documents that could have clarified the issues if an opportunity had been granted.

Respondent’s Arguments

  • The Income Tax Department argued that the initial notices dated 21.04.2021 were validly issued.
  • It was contended that the subsequent email allegedly extending time was not issued by the respondent authority.
  • Therefore, according to the respondent, there was sufficient compliance with principles of natural justice.

Court’s Findings

The Delhi High Court observed that:

  • The principles of natural justice were not adequately complied with, as the petitioner did not get sufficient opportunity to respond.
  • The COVID-19 lockdown (19 April 2021 to 07 June 2021) created practical difficulties affecting compliance timelines.
  • Even if the respondent’s version was accepted, the petitioner did not have a fair and effective opportunity under Section 142(1).

The Court emphasized that procedural fairness is essential, especially when substantial tax liabilities and penalties are involved.

Court Order / Decision

  • The impugned assessment orders dated 09.06.2021 and 10.06.2021 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 in accordance with law 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

  • The Court clarified that even procedural lapses or ambiguity in communication—especially during extraordinary situations like a pandemic—can amount to violation of natural justice if they deprive a party of fair hearing.
  • Authorities must ensure clear communication and adequate opportunity before passing adverse orders.

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 274 – Procedure for penalty
  • Section 271(1)(c) – Penalty for concealment of income

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


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