The Delhi High Court bench of Justice Manmohan and Justice Dinesh Kumar Sharma has held that the time of eight hours to file a reply to the show cause notice was neither reasonable nor effective. The assessee could not have provided relevant information and documents to establish his case in such a short period of time.
The petitioner/assessee submitted that the reasonable time was not given to file a reply to the show cause notice, which was issued only on March 30th, 2022 at 16:21 p.m., effectively giving the petitioner only eight hours' time to file a reply to the show cause notice.
The petitioner contended that it was not possible to gather all the details of expenses incurred towards improvement of property, details of exemption claimed under Section 54 of the Income Tax Act, and the authentic supporting documents/evidences, which had been referred to in the draft assessment order.
The petitioner contended that the time gap between giving the show cause notice and passing of the reassessment order was only around twenty-two hours, which means that the department considered the reassessment proceedings an empty formality.
The department stated that since the matter was bound by the limitation of time which got barred on March 31st, 2022, the proposed draft order along with show cause notice for proceedings was issued under Section 147 of the Income Tax Act on March 30th, 2022 by providing an opportunity for hearing fixed on or before March 30th, 2022 by 6.30 p.m. However, due to paucity of time, the final assessment order in the case was passed only on March 31st, 2022 at 13:54:05 IST, till the time the assessee has not responded.
The court set aside the reassessment order on grounds of the principle of natural justice.
The court directed the petitioner to file a response to the show cause notice dated March 30th, 2022 on or before May 13th, 2022. The department was directed to pass an assessment order within six weeks in accordance with the law.
Case Title: Rahul Biala Vs ITO
Citation: 2022 LiveLaw (Del) 455
Counsel For Petitioner: Advocates Ruchesh Sinha with Divya
Counsel For Respondent: Senior Standing Counsel Zoheb Hossain