Faceless Assessment: Minimum time of 7 days to be granted to file reply to show cause notice, HC

Faceless Assessment: Minimum time of 7 days to be granted to file reply to show cause notice, HC

Deepak Gupta | May 16, 2022 |

Faceless Assessment: Minimum time of 7 days to be granted to file reply to show cause notice, HC

Faceless Assessment: Minimum time of 7 days to be granted to file reply to show cause notice, HC

In this matter, notice was issued to petitioner-society under clause (b) of Section 148A of the Act on 22nd March 2022 on the ground that the Petitioner had made cash deposits of Rs. 92,11,800/- in its bank accounts but had not filed its Income Tax Return (ITR). Further, the Petitioner was asked to furnish a reply to the said notice on or before 25th March 2022.

Petitioner duly replied to the said notice on 25th March, 2022 clearly explaining that all the cash deposited by the Petitioner was received from the members of the society, for which cash receipts had been issued to the members and proper record in this regard had been maintained. The Councel of Petitioner further states that in the reply, the petitioner had also explained that KYC of all the members were properly done and books of accounts of the Petitioner were duly audited and were furnished to the Registrar of Companies (ROC).

Yet, an order dated 6th April 2022 under clause (d) of Section 148A rejecting the reply of the Petitioner on the ground that although the Petitioner had stated that the cash deposited in the bank account of the Petitioner was received from its members yet it had failed to provide the list of members who had given cash to the Petitioner was passed against the petitioner.

Petitioner was granted only three days’ time to file its response to the notice. He states that the list of members could not be filed along with the reply as the time granted to the Petitioner to prepare the list and furnish along with its reply was inadequate. He emphasises that the revenue has failed to give a minimum time of seven days to the petitioner to file its reply and, thus, failed to fulfil the criterion of ‘not less than seven days” as provided in clause (b) of Section 148A of the Act.

Mr. Sunil Agarwal, Counsel of the Income Tax Department stated that the Assessing Officer did not issue any corrigendum extending the time limit for filing the reply as no such request was made. He further states that as the said reply was filed within the time stipulated in the notice dated 22nd March, 2022, no prejudice has been caused to the petitioner.

Order of High Court:

7. Having heard learned counsel for the parties, this Court is of the view that under Section 148A(b) of the Act, a minimum time of seven days has to be granted to the assessee to file its reply to the said show cause notice.

8. In the present case, though the petitioner responded to the show cause notice, yet it could not provide all the relevant details and documents, as the time period of three days to respond to the show cause notice was inadequate. Consequently, this Court is of the view that in the present case not only there has been a violation of the mandatory time period stipulated under Section 148A(b) of the Act, but grave prejudice has been caused to the petitioner.

9. Accordingly, the impugned order dated 6th April, 2022 under Section 148A(d) and notice under Section 148 of the Act are quashed. If the law permits the respondent/revenue to take further steps in the matter, it shall be at liberty to do so. Needless to state that if and when such steps are taken and if the petitioner has a grievance, it shall be at liberty to take its remedies in accordance with law.

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