24 hrs time granted to file response to Income Tax SCN not reasonable: HC sets aside Assessment Order

The Kerala High Court in the matter of ANEESH Vs. THE UNION OF INDIA has set aside the Assessment Order because 24 hours time granted to file a response to Income Tax SCN is not reasonable.

The present writ petition has been filed impugning the assessment order dated 31.03.2022 under Section 147 r/w Section 144 of the Income Tax Act, 1961 (‘the IT Act’ for short), in respect of the assessment year 2017-2018. The assessee did not file the return of his income for the said assessment year. As per the information received through the Multi-layer NMS cases in AIMS module of ITBA, it was seen that the assessee during the financial year 2016-2017, received Rs.1,42,48,884 from M/s Smart Way India Enterprises LLP on which TDS was deducted under Section 194H for Rs.8,26,336.

The petitioner’s case was reopened for assessment under Section 147 of the IT Act after obtaining approval from the competent authority. Notice under Section 148 of the IT Act was issued on 28.03.2021. Several notices were issued to the petitioner but he did not respond to any of the notices and finally, a notice dated 29.03.2022 was issued asking the petitioner to show cause why the proposed addition should not be made. The draft assessment order was forwarded to the National Faceless Assessment Authority. The final notice was sent to the petitioner on 29.03.2022 and the petitioner was given only one day time for filing the reply i.e., on 30.03.2022. Thereafter, the assessment order was passed on 31.03.2022, assessing the total income for R0s.1,42,48,884. as evidenced by Ext.P12. The tax was calculated after giving credit for the prepaid taxes after due verification. Interest charged under Section 234A, 234B and 234C was demanded and penalty proceedings under Section 271F of the IT Act for not filing ITR and under Section 271A of the IT Act for failure to maintain books of accounts were directed to be initiated.

Though some other grounds besides the violation of the principles of natural justice have been urged. However, I find no substance in those grounds to assail the validity of the assessment order. The ground of violation of principles of natural justice does not have some substance as only one day time was granted to the petitioner to file the reply to the show cause notice of the proposed additions to the income of the petitioner. This court is of the view that 24 hrs time granted to the petitioner to file response to the show cause notice dated 29.03.2022, was not a reasonable opportunity to the petitioner, and therefore, on the said ground, the writ petition is allowed. The impugned assessment order and further proceedings are set aside. The matter is remanded back to the National Faceless Assessment Centre, Delhi to provide an opportunity to the petitioner for filling reply to the show cause notice dated 29.03.2022 and thereafter, to proceed with the final order.

The National Faceless Centre, Delhi is directed to active the link for filing the reply to the show cause notice by the petitioner. After the link is activated, the petitioner shall file the reply within seven days. It is made clear that no further opportunity shall be granted to the petitioner and thereafter, the National Faceless Assessment Centre, Delhi shall proceed to finalise the assessment under Section 147 r/w under Section 144 of the IT Act.

This writ petition is allowed as per the aforementioned directions. If the petitioner requests for personal hearing, he should be provided with the opportunity of being heard.

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