A division bench of the Delhi High Court has quashed a show-cause notice and a re-assessment order passed within a gap of two hours by the income tax department.
The Petitioner, Mr. Rahul Balia 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 Respondents considered the reassessment proceedings as an empty formality.
The department submitted before the Court that since the matter was bounded by the limitation of time which got barred on 31st March, 2022, the proposed draft order along with a show-cause notice for proceedings was issued under Section 147 of the Act on 30th March, 2022 by providing an opportunity for hearing fixed on or before 30th March, 2022 by 6.30 p.m. However, due to paucity of time as stated above, the final assessment order in the case was passed only on 31st March, 2022 at 13:54:05 IST till the time the assessee has not objected/responded.
Justice Manmohan and Justice Dinesh Kumar Sharma observed that the “time of eight hours to file a reply to the show cause notice was neither reasonable nor effective, as, within this short time, the Petitioner could not have supplied relevant information and documents to substantiate his case. Consequently, this Court is of the view that in the present case, there has been a violation of the principle of natural justice.”
Concluding the order, it was held that “accordingly, the impugned order is set aside and the Petitioner is directed to file his response to the show cause notice dated 30th March, 2022 on or before 13th May, 2022. The Respondent No.2 is directed to pass an assessment order within six weeks thereafter in accordance with law.”
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