Facts of the Case

The petitioner filed multiple writ petitions challenging 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 multiple assessment years.

The petitioner contended that notices dated 21 April 2021 required a response, but due to an email communication (received later the same day) which did not specify any deadline and due to the COVID-19 lockdown in Delhi, he believed that the time for compliance stood extended.

However, the Assessing Officer proceeded to pass assessment orders without granting an effective opportunity to respond, resulting in substantial tax demands and penalty initiation.

Issues Involved

  1. Whether the assessment orders were passed in violation of principles of natural justice.
  2. Whether the petitioner was denied a reasonable opportunity to respond to notices under Section 142(1).
  3. Whether pandemic-related circumstances justified extension or relaxation in compliance timelines.

Petitioner’s Arguments

  • The assessment orders were passed without granting a fair and effective opportunity of hearing.
  • The petitioner relied on an email communication which did not specify a deadline, leading to a bona fide belief that time stood extended.
  • The COVID-19 lockdown in Delhi prevented timely compliance and submission of documents.
  • The failure to provide adequate opportunity caused serious prejudice, including imposition of substantial tax liabilities and penalty proceedings.

Respondent’s Arguments

  • The Income Tax Department contended that valid notices dated 21 April 2021 had already been issued.
  • It was argued that the subsequent email relied upon by the petitioner was not issued by the department.
  • The respondent maintained that sufficient compliance with principles of natural justice had been ensured through the initial notices.

Court Findings / Order

  • The Court observed that principles of natural justice were not adequately complied with.
  • Even accepting the respondent’s version, the petitioner did not receive sufficient opportunity to respond due to the prevailing lockdown conditions.
  • The Court noted that the petitioner had relevant documents which could have been produced if proper 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.
  • Directions issued:
    • Petitioner to file response within two weeks
    • Fresh assessment to be conducted with proper opportunity of hearing
    • Personal appearance scheduled before the Assessing Officer

Important Clarification

  • The Court emphasized that procedural fairness cannot be compromised, even in tax proceedings.
  • Pandemic-related circumstances must be considered while evaluating compliance timelines.
  • Mere issuance of notice is not sufficient; effective opportunity of hearing is mandatory.

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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