Gujarat High Court
Kaypee Enterprise vs Assessment Unit, Income Tax Department on 2 September, 2024
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/4924/2024 ORDER DATED: 02/09/2024
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 4924 of 2024
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KAYPEE ENTERPRISE
Versus
ASSESSMENT UNIT, INCOME TAX DEPARTMENT & ANR.
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Appearance:
MR B S SOPARKAR(6851) for the Petitioner(s) No. 1
MRS SWATI SOPARKAR(870) for the Petitioner(s) No. 1
DS AFF.NOT FILED (N) for the Respondent(s) No. 1,2
MR NIKUNT K RAVAL(5558) for the Respondent(s) No. 2
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE NIRAL R. MEHTA
Date : 02/09/2024
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1.Heard learned advocate Mr.B.S.Soparkar for the petitioner and learned Senior Standing Counsel Mr.Karan Sanghani for learned Senior Standing Counsel Mr.Nikunt Raval for the respondent no.2.
2.By this petition under Article 227 of the Constitution of India, the petitioner has challenged the Assessment Order dated 11.03.2024 passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961 (for short "the Act").
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3.The assessee filed return of income for Assessment Year 2022-23 for declaring the income of Rs.1,63,13,600/- on 12.08.2022. It appears that thereafter, the notices were issued from time to time on 01.06.2023, 03.10.2023, 24.01.2024 and 04.03.2024 the assessee filed reply to the notice issued under Section 143(2)/ 142(1) of the Act on 14.07.2023, 16.10.2023, 01.11.2023, 13.02.2024 and 07.03.2024.
4.After considering the replies filed by the petitioner a show-cause notice was issued along with the draft assessment order as per the provision of Section 144B of the Act on 04.03.2024 granting time to the petitioner upto 07.03.2024 to file the reply.
5.The petitioner on 05.03.2024 made an application for adjournment online, however the same was not responded and straight away the impugned Assessment Order was passed on 11.03.2024.
6.Learned advocate Mr.B.S.Soparkar for the petitioner submitted that there is clear violation of principle of natural justice as Page 2 of 11 Uploaded by URIL KRISHNAKUMAR RANA(HC01406) on Tue Sep 10 2024 Downloaded on : Fri Sep 13 22:11:04 IST 2024 NEUTRAL CITATION C/SCA/4924/2024 ORDER DATED: 02/09/2024 undefined only three days time was granted in the show- cause notice dated 04.03.2024 and three out of the four issues in the show-cause notice were raised for the first time. It was also pointed out that though the assessee sought time to file reply on 05.03.2024 without considering such request for adjournment, the impugned order was passed on 11.03.2024. Learned advocate Mr.Soparkar referred to the impugned Assessment Order to point out that the Assessing Officer has stated that the request made by the petitioner is denied however, there was no communication from the respondent to the petitioner for denial of the adjournment request made on 05.03.2024. It was therefore submitted that the petitioner came to know about denial of the request only when the impugned Assessment Order dated 11.03.2024 was served upon the petitioner. It was therefore submitted that the petitioner ought to have been granted the opportunity of personal hearing and the same could not have been denied on the ground of time barring assessment as there was sufficient time available with the respondent Assessing Officer upto 31.03.2024 to pass the assessment order. In support of his submissions, learned advocate Mr.Soparkar Page 3 of 11 Uploaded by URIL KRISHNAKUMAR RANA(HC01406) on Tue Sep 10 2024 Downloaded on : Fri Sep 13 22:11:04 IST 2024 NEUTRAL CITATION C/SCA/4924/2024 ORDER DATED: 02/09/2024 undefined referred to and relied upon the following decisions.
(i) Dangee Dums Ltd. Vs. National Faceless Assessment Centre, Govt. of India, [2023] 148 taxmann.com 22 (Gujarat);
(ii) Riddhi Steel and Tube Ltd. Vs. National Faceless Assessment Centre, [2022] 145 taxmann.com 542 (Gujarat);
(iii) Preethi Himachal & Co. Vs.UOI, [2022] 135 taxmann.com 265 (Himachal Pradesh)
7.On the other hand, learned Senior Standing Counsel Mr.Karan Sanghani appearing for the respondent submitted that the petitioner referred to and relied upon the order sheet which is placed on record by him to point out that on 09.03.2024, the right of the petitioner to file reply was blocked as the time granted to the petitioner was over. It was also pointed out that the Assessing Officer has categorically stated in the Assessment Order that the request was denied on account of the time barring assessment. It was submitted that the Assessing Officer has referred to all the replies filed by the petitioner and therefore, it could not be Page 4 of 11 Uploaded by URIL KRISHNAKUMAR RANA(HC01406) on Tue Sep 10 2024 Downloaded on : Fri Sep 13 22:11:04 IST 2024 NEUTRAL CITATION C/SCA/4924/2024 ORDER DATED: 02/09/2024 undefined said that the petitioner has been denied any opportunity of making submissions and there is no breach of principles of natural justice.
8. Considering the above submissions, it is not in dispute that though the petitioner has prayed for the adjournment on 05.03.2024, the same was neither denied nor accepted and no communication for denial of such adjournment was made to the petitioner by the respondent Assessing Officer. The petitioner came to know of the rejection of the adjournment request only when the Assessment order was served upon the petitioner. Thus there is a clear breach of principles of natural justice. This Court in such circumstances, in case of Riddhi Steel and Tube Ltd.(Supra) has observed as under:
"7. We have heard the learned advocates appearing for the respective parties and perused the impugned order. The facts are not in dispute as per Annexure-E Page-76 of the petition is an extract from the e-filing portal, wherein, the adjournment details are stated to show that the Page 5 of 11 Uploaded by URIL KRISHNAKUMAR RANA(HC01406) on Tue Sep 10 2024 Downloaded on : Fri Sep 13 22:11:04 IST 2024 NEUTRAL CITATION C/SCA/4924/2024 ORDER DATED: 02/09/2024 undefined adjournments request was made on 18thSeptember, 2021 and reason for seeking adjournment is stated "gathering of material from multiple sources requires time" and adjournment was sought up to 5 th October, 2021.
Thus, the petitioner sought
adjournment on 18thSeptember, 2021,
however, without considering the
request of the petitioner for
adjournment to file reply to the show- cause notice dated 18th September, 2021, the impugned assessment order was passed on 21st September, 2021.
8. Section 144B of the Act provides detailed procedure for Faceless Assessment. Section 144B was introduced by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 w.e.f. 1st April, 2021. Section 144B(1) starts with a non-obstante clause i.e. "notwithstanding anything to the contrary contained in any other provisions of this Act, the assessment under sub-section (3) of section 143 or under section 144, in the cases Page 6 of 11 Uploaded by URIL KRISHNAKUMAR RANA(HC01406) on Tue Sep 10 2024 Downloaded on : Fri Sep 13 22:11:04 IST 2024 NEUTRAL CITATION C/SCA/4924/2024 ORDER DATED: 02/09/2024 undefined referred to in sub-section (2), shall be made in a faceless manner..." as per the procedure prescribed therein.
9. Section 144B(1)(xvi) provides for an opportunity to the assessee, in case any variation prejudicial to the interest of assessee is proposed in the draft assessment order by serving a notice calling upon the assessee to show cause as to why the proposed variation should not be made. Thus, there is a mandatory provision to provide an opportunity of hearing to the assess by issuing a show-cause notice along with the draft assessment order, which in the facts of the case was issued on 18thSeptember, 2021 calling upon the assessee to furnish the reply before 23.59 hours of 21st September, 2021. Though the assessee prayed for adjournment on 18thSeptember, 2021, without considering the same, the impugned assessment order was passed on 21st September, 2021. Thus, there is clear violation of principles of natural justice by the respondent authority Page 7 of 11 Uploaded by URIL KRISHNAKUMAR RANA(HC01406) on Tue Sep 10 2024 Downloaded on : Fri Sep 13 22:11:04 IST 2024 NEUTRAL CITATION C/SCA/4924/2024 ORDER DATED: 02/09/2024 undefined contrary to the provisions of Section 144B of the Act.
10. It is also pertinent to note that as per Sub-Section (vii) of Section 144B(7), the assessee is also required to be given personal hearing so as to make his oral submissions or present his case before the income-tax authority on request. However, in the facts of the case, the request for adjournment by the petitioner was not at all replied and the impugned assessment order is passed without providing an opportunity of hearing to the assessee so as to enable him to give explanation for proposed addition. Section 144B(1)(xii) provides that on receipt of showcause notice, the assessee may furnish his response to the National Faceless Assessment Centre and as per clause
(xiv), the assessment unit shall make a revised draft assessment order after considering the response of the assessee and send it to the National Faceless Assessment Centre. However, the respondent authority without Page 8 of 11 Uploaded by URIL KRISHNAKUMAR RANA(HC01406) on Tue Sep 10 2024 Downloaded on : Fri Sep 13 22:11:04 IST 2024 NEUTRAL CITATION C/SCA/4924/2024 ORDER DATED: 02/09/2024 undefined giving any opportunity of hearing to the petitioner by not considering the request for adjournment, passed the impugned assessment order.
11. In view of above, it can safely be said that the impugned order was passed by the respondent in violation of principles of natural justice without affording an opportunity of personal hearing by not following the prescribed procedure laid down as per the provisions of section 144B of the Act, 1961 for Faceless assessment.
Ratio laid down by the Bombay High Court as well this Court in the following decisions would squarely be applicable to the facts of this case :
1) Golden Tobacco Limited v. The National Faceless Assessment Centre and others (judgment dated 28.10.2021 in Writ Petition No.1282/2021).
2) Mantra Industries Ltd. v. National Faceless Assessment Centre reported in (2021) 131 taxmann.com 165(Bombay).Page 9 of 11 Uploaded by URIL KRISHNAKUMAR RANA(HC01406) on Tue Sep 10 2024 Downloaded on : Fri Sep 13 22:11:04 IST 2024
NEUTRAL CITATION C/SCA/4924/2024 ORDER DATED: 02/09/2024 undefined
3) Gandhi Reality (India) Private Limited v.
Assistant/Joint/Deputy/Assistant Commissioner of Income Tax/Income Tax Officer (Order dated 05.10.2021 in Special Civil Application No.7662/2021).
4) Idex India Private Limited v. Additional/Joint/Deputy/Assistant Commissioner of Income Tax/Income Tax Officer (order dated 14.12.2021 in Special Civil Application No. 16690/2021)."
9.Considering the above, We are of the opinion that the petitioner ought to have been granted the opportunity of hearing as provided under the provisions of the Act. Therefore, the petition succeeds and is accordingly allowed. The impugned order of Assessment dated 11.03.2024 passed by the respondent authority under Section 143(3) read with Section 144B and the demand notice under Section 156 of the Act are hereby quashed and set aside. The respondent shall be at liberty to proceed with the assessment Page 10 of 11 Uploaded by URIL KRISHNAKUMAR RANA(HC01406) on Tue Sep 10 2024 Downloaded on : Fri Sep 13 22:11:04 IST 2024 NEUTRAL CITATION C/SCA/4924/2024 ORDER DATED: 02/09/2024 undefined under the provision of Section 144B of the Act from the stage of issuance of the draft Assessment Order as permissible under the law after providing an opportunity of hearing to the petitioner as per the provisions of Section 144B(1)(vii) of the Act. Such exercise shall be completed within 12 weeks from the date of receipt of copy of this order.
10. It is made clear that We have not examined the merits of the case as the impugned order is quashed and set aside only on the ground of breach of principles of natural justice and the matter is remanded back for passing a fresh de novo order after giving an opportunity of hearing to the petitioner in accordance with law. The petition is accordingly disposed of. Notice is discharged.
(BHARGAV D. KARIA, J) (NIRAL R. MEHTA,J) URIL RANA Page 11 of 11 Uploaded by URIL KRISHNAKUMAR RANA(HC01406) on Tue Sep 10 2024 Downloaded on : Fri Sep 13 22:11:04 IST 2024