Facts of the Case

The petitioner, M/s. BT India Private Ltd., filed writ petitions challenging orders dated 26.03.2020 passed by the Income Tax Officer for Assessment Years 2012–13 and 2013–14 under Section 201 of the Income Tax Act, 1961. The petitions also sought quashing of demand notices issued under Section 156 and penalty proceedings initiated under Section 271C of the Act.

The grievance of the petitioner was that show cause notices were issued on 17.03.2020 requiring response by 20.03.2020. Due to the nationwide COVID-19 lockdown, the petitioner requested additional time (three weeks) citing lack of access to records while working remotely.

Despite this, further notice dated 23.03.2020 was issued requiring compliance by 24.03.2020, and ultimately, orders were passed on 26.03.2020 without granting reasonable opportunity.

Issues Involved

  1. Whether passing assessment orders under Section 201 during lockdown without granting reasonable opportunity violates principles of natural justice.
  2. Whether rejection of adjournment request despite genuine constraints (COVID-19 lockdown) is arbitrary.
  3. Validity of demand notices under Section 156 and penalty proceedings under Section 271C arising from such orders.

Petitioner’s Arguments

  • The petitioner contended that sufficient opportunity was not granted to respond to show cause notices.
  • Due to the COVID-19 lockdown, employees were working from home and lacked access to official documents necessary for preparing a reply.
  • The Income Tax Officer acted in undue haste by proceeding with adjudication despite being aware of the extraordinary situation.
  • The impugned order itself contained contradictory observations—rejecting adjournment yet claiming to have considered submissions.

Respondent’s Arguments

  • The respondent (Income Tax Department), through its counsel, submitted that the impugned orders would be withdrawn.
  • It was assured that the petitioner would be given an opportunity to respond to the show cause notices.

Court Findings / Order

The Delhi High Court recorded the statement of the respondent that:

  • The impugned orders dated 26.03.2020 for both assessment years would be withdrawn.
  • All consequential proceedings would also stand withdrawn.
  • The petitioner would be granted an opportunity to file replies to the show cause notices.

The Court further directed:

  • A period of two weeks from the lifting of lockdown would be given to the petitioner to submit replies.
  • Thereafter, the respondent is at liberty to proceed in accordance with law.

The petitions were disposed of accordingly.

Important Clarification by Court

The Court clearly held that:

  • The order is passed in peculiar facts and circumstances of the case.
  • It shall not be treated as a precedent in other matters.

Sections Involved

  • Section 201(1) & 201(1A) – Income Tax Act, 1961
  • Section 156 – Demand Notice
  • Section 271C – Penalty for failure to deduct tax at source

 Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2020:DHC:1811-DB/HKO22042020CW29812020_171456.pdf

 

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