Case Note & Summary
The petitioner, Cheftalk Food and Hospitality Services Pvt. Ltd., challenged an Assessment Order dated 27 March 2024 passed under Section 144 read with Section 144B of the Income Tax Act, 1961. The primary grievance was that a Show Cause Notice issued on 22 March 2024 at 20:03:29 IST required a response by 17:30 hours on 23 March 2024, giving less than 24 hours. The petitioner objected, citing breach of natural justice and reliance on a Karnataka High Court decision. The Assessing Officer extended time to 26 March 2024 at 11:30 AM, but the petitioner could not comply. The assessment was completed on 27 March 2024. The petitioner argued that under Section 144B(6)(xi) and the Standard Operating Procedure (SOP) dated 3 August 2024, a seven-day response time is mandatory. The respondents conceded the applicability of the SOP. The court found that the Assessing Officer arbitrarily granted only two days, violating the SOP and natural justice. The court quashed the Assessment Order, remanded for fresh assessment, directed the portal to be opened within two weeks, allowed the petitioner seven days to respond, and ordered a fresh assessment within four weeks thereafter.
Headnote
A) Income Tax - Faceless Assessment - Standard Operating Procedure - Section 144B(6)(xi) of Income Tax Act, 1961 - The Assessing Officer granted less than 24 hours initially and only two days extension to respond to a Show Cause Notice, contrary to the SOP requiring a seven-day response time. The court held that this was arbitrary and in breach of natural justice, quashing the Assessment Order and remanding for fresh proceedings (Paras 1-9).
Issue of Consideration
Whether the Assessment Order passed under Section 144 read with Section 144B of the Income Tax Act, 1961, is vitiated for non-compliance with the Standard Operating Procedure requiring a seven-day response time to a Show Cause Notice, thereby violating principles of natural justice.
Final Decision
The impugned Assessment Order dated 27 March 2024 is quashed and set aside. The proceedings are remanded for a fresh Assessment Order under Section 144 read with Section 144B of the Act. The portal shall be opened within two weeks; the petitioner shall submit a detailed response within seven days thereafter; a fresh Assessment Order shall be passed within four weeks from the date of uploading the reply. Consequential Computation Sheet and Notice of Demand are also quashed. All contentions are kept open.
Law Points
- Principles of natural justice
- Standard Operating Procedure under Section 144B(6)(xi) of Income Tax Act
- 1961
- Right to fair opportunity
- Faceless assessment
Case Details
2024 LawText (BOM) (8) 131
Writ Petition No. 2919 of 2024
G. S. Kulkarni, Somasekhar Sundaresan
Sandeep Huilgol (for Petitioner), Suresh Kumar (for Respondent-Revenue)
Cheftalk Food and Hospitality Services Pvt. Ltd.
Income Tax Officer, Ward (9)(2)(1) Mumbai; The Assessment Unit, Income Tax Department, New Delhi; The Union of India
Subscribe to unlock Case Details (Citation, Judge, Date & more)
Subscribe Now
Nature of Litigation
Writ petition under Article 226 of the Constitution of India challenging an assessment order under the Income Tax Act, 1961.
Remedy Sought
Quashing of Assessment Order dated 27 March 2024 and remand for fresh assessment with proper opportunity.
Filing Reason
Assessment Order passed without granting seven-day response time to Show Cause Notice as per SOP, violating principles of natural justice.
Previous Decisions
Show Cause Notice issued on 22 March 2024; petitioner objected on 23 March 2024; Assessing Officer extended time to 26 March 2024; assessment completed on 27 March 2024.
Issues
Whether the Assessment Order is vitiated for non-compliance with the SOP requiring seven-day response time?
Whether the principles of natural justice were violated by granting insufficient time to respond to the Show Cause Notice?
Submissions/Arguments
Petitioner: The SOP under Section 144B(6)(xi) mandates a seven-day response time; granting less than 24 hours and only two days extension is arbitrary and in breach of natural justice.
Respondent: Conceded applicability of SOP but argued that extension was granted; however, did not dispute the breach.
Ratio Decidendi
The Standard Operating Procedure issued under Section 144B(6)(xi) of the Income Tax Act, 1961, requiring a seven-day response time to a Show Cause Notice is mandatory. Failure to adhere to this timeline, absent valid justification, constitutes a breach of principles of natural justice and renders the assessment order arbitrary and liable to be quashed.
Judgment Excerpts
The Assessing Officer, therefore, appears to have arbitrarily exercised jurisdiction by granting an extension of only two days. In our opinion, such approach on the part of the Respondents was clearly in breach of the SOP, which has also resulted in breach of the principles of natural justice...
Response time of 7 days from the issue of SCN.
Procedural History
The petitioner filed a writ petition under Article 226 of the Constitution of India challenging the Assessment Order dated 27 March 2024 passed under Section 144 read with Section 144B of the Income Tax Act, 1961. The petition was heard by a Division Bench of the Bombay High Court on 13 August 2024, and the court allowed the petition, quashing the Assessment Order and remanding for fresh proceedings.
Acts & Sections
- Income Tax Act, 1961: 144, 144B, 144B(6)(xi)
- Constitution of India: Article 226
