Case Note & Summary
The dispute arose from an assessment order issued under the Income Tax Act, 1961 for the Assessment Year 2018-19. The petitioner, a manufacturer of ceramic tiles, had filed a return declaring minimal income, but the case was selected for scrutiny. Initially, an assessment order was passed without providing a personal hearing, leading the petitioner to challenge it in a writ petition. The High Court set aside that order on grounds of violation of natural justice and remanded the matter with directions to pass a fresh de novo order within 12 weeks after providing a hearing via video conferencing. During the remand proceedings, the Jurisdictional Assessing Officer instead of the Faceless Assessing Officer issued notices and conducted a hearing, but then the Faceless Assessing Officer suddenly took over, giving the petitioner only one day to respond to a show-cause notice. The impugned order was passed beyond the 12-week limit without any application for extension. The core legal issues were whether the order was valid given the non-compliance with court directions and violation of natural justice. The petitioner argued that the order should be quashed due to the time limit breach and insufficient opportunity to respond. The respondents contended that technical issues and portal modifications caused delays, requesting remand. The court analyzed that the respondents admitted to not meeting the 12-week deadline and not seeking extension, and the sudden officer change with minimal response time violated natural justice. The court held that the impugned order was invalid on both counts, quashing it and emphasizing adherence to court directions and fair procedures. The decision did not remand the matter again, effectively disposing of the petition in favor of the petitioner.
Headnote
A) Income Tax Law - Assessment Orders - Compliance with Court Directions - Income Tax Act, 1961, Sections 143(3), 144B - The High Court had earlier set aside an assessment order and remanded the matter with a direction to pass a fresh de novo order within 12 weeks after providing a fresh opportunity of hearing - The respondents failed to pass the order within the stipulated 12 weeks and did not seek extension from the Court - Held that the impugned order passed beyond the time limit is invalid and required to be quashed (Paras 5, 5.1). B) Income Tax Law - Assessment Orders - Violation of Natural Justice - Income Tax Act, 1961, Sections 143(3), 144B - The petitioner was granted only one day to respond to a show-cause notice issued by the Faceless Assessing Officer after a sudden change in officers, which was insufficient time - This deprived the petitioner of a reasonable opportunity to be heard - Held that the impugned order suffers from violation of principles of natural justice and is required to be quashed (Paras 5, 5.1). C) Income Tax Law - Assessment Procedure - Change of Assessing Officers - Income Tax Act, 1961, Sections 143(3), 144B - The High Court had directed the Faceless Assessing Officer to pass a fresh de novo order, but the Jurisdictional Assessing Officer intervened and conducted proceedings, followed by the Faceless Assessing Officer taking over suddenly - This created confusion and procedural irregularities - Held that such intervention and change of officers without justification rendered the assessment process illegal (Paras 5, 5.1).
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Issue of Consideration: Whether the impugned Assessment Order passed under Section 143(3) read with Section 260 read with Section 144B of the Income Tax Act, 1961 is valid given the violation of natural justice and non-compliance with the High Court's earlier directions.
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Final Decision
The High Court quashed and set aside the impugned Assessment Order dated 10.12.2024, allowing the writ petition.
