VIBGYOR VINIMAY PVT. LTD. vs. ADDITIONAL / JOINT / DEPUTY / ASSISTANT COMMISSIONER OF INCOME TAX / INCOME -TAX OFFICER AND ORS

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WP/4102/2022HC BombayHCBM01039346202111 June 2025Bench: HON'BLE SHRI JUSTICE B.P. COLABAWALLA,HON'BLE SHRI JUSTICE FIRDOSH PHIROZE POONIWALLA5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the Respondents acted in violation of the principles of natural justice by granting insufficient time of just one day to the Petitioner to respond to the show cause notices proposing variations. The Court found this to be apparent from the facts presented. Consequently, without going into the merits of the case or other contentions, the Court set aside the assessment order dated September 30, 2021. The matter was remanded back to Respondent No. 1 to pass a fresh de novo order after providing an opportunity of hearing to the Petitioner. This exercise is to be completed within 12 weeks from the date of uploading the order. The Court clarified that no opinion was expressed on the merits of the matter.

What were the facts?

The Petitioner, Vibgyor Vinimay Private Limited, is challenging the final assessment order dated September 30, 2021, passed by Respondent No. 1. The assessment year is 2013-2014. The assessment was reopened under section 148 based on information from a search in the JSK Group case. Notices under section 143(2) and 142(1) were issued. A show cause notice was issued on September 28, 2021, at 18:45 hrs, granting the Petitioner until 23:59 hrs on September 29, 2021, to respond. The Petitioner claims this notice did not contain proposed variations. A second show cause notice with variations was digitally signed at 19:20 hrs on the same day. The Petitioner only became aware of this second notice in October 2021 when accessing its e-filing account. The final assessment order made additions of Rs. 1,90,25,355/- under section 68.

What were the issues?

1. Whether the final assessment order dated September 30, 2021, passed by Respondent No. 1 is without jurisdiction due to the non-issuance of a draft assessment order as envisaged under section 144B(1)(xvi) of the Income Tax Act, 1961. The Petitioner argues that the issuance of a draft assessment order is mandatory under the Faceless Assessment Scheme and its non-issuance is a jurisdictional defect. The Petitioner relies on the Bombay High Court judgment in Rinku R. Rai v. ITO (454 ITR 33). 2. Whether the Petitioner was denied principles of natural justice due to insufficient time granted to respond to the show cause notices. The Petitioner contends that the first show cause notice did not provide variations, and both notices granted only one day for a response, breaching the CBDT's Standard Operating Procedure (SOP) of August 3, 2022, which allows 7 days. The Respondents do not dispute granting only one day for the response.

Which sections of the Income-tax Act were involved?

Section 144B,Section 144B(1)(xvi),Section 148,Section 143(2),Section 142(1),Section 68,Section 132,Section 147

AI-generated summary — verify with the full judgment below

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 4102 OF 2022 Vibgyor Vinimay Private Limited …Petitioner Versus Additional / Joint / Deputy / Assistant Commissioner of Income Tax / Income-tax Officer National Faceless Assessment Centre, Delhi & Ors. …Respondents Mr. Jeet Kamdar i/b Ganeshmurthy, Advocates for the Petitioner. Mr. Akhileshwar Sharma, Advocates for the Respondents.

CORAM: B. P. COLABAWALLA & FIRDOSH P. POONIWALLA, JJ. DATE: JUNE 11, 2025 P. C. 1. By this Petition, the Petitioner is aggrieved by the final assessment order dated 30th September 2021 (‘impugned order’) passed by Respondent No. 1 on the ground that the said assessment order has been passed in violation of the provisions of section 144B of the Act in as much as the said order has been passed without passing or issuing the draft assessment order as envisaged in section 144B(1)(xvi) of the Act and without following the principles of natural justice as the show cause notice issued by Page 1 of 5 JUNE 11, 2025 Aswale ANJALI TUSHAR ASWALE Digitally signed by ANJALI TUSHAR ASWALE Date: 2025.06.12 13:11:22 +0530

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Respondent No. 1 granted only one days time to furnish a reply to the Petitioner. 2. For the year under consideration, i.e. Assessment Year 2013- 2014, the Petitioner filed a return of income on 23rd September 2013 declaring a total income of Rs. 1,46,73,416/-. A notice under section 148 of the Act was issued on 17th March 2020 reopening the assessment of the Petitioner. The reasons recorded for reopening relied on information received from DCIT Central Circle 8(1), Mumbai where a search and seizure action under section 132 of the Act was conducted in the case of JSK Group and related entities on 25th October 2016 and it was found that JSK Group had taken huge unsecured loans from various entities including the Petitioner. Subsequently, a notice under section 143(2) was issued on 29th September 2020 and notices dated 3rd September 2021 and 10th September 2021 were issued under section 142(1) of the Act which were replied to on 21st September 2021. 3. A show cause notice (1st show cause notice) was issued on 28th September 2021 [digitally signed at 18.45 hrs] granting an opportunity to the Petitioner to show cause why a proposed variation should not be made to complete the assessment. The Petitioner was granted time till 23.59 hours of 29th September 2021 to furnish a response. However, the show cause notice Page 2 of 5 JUNE 11, 2025 Aswale

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did not provide any variations as per the draft assessment order and no response was filed by the Petitioner. 4. A final assessment order dated 30th September 2021 was passed by the Respondent No. 1 under section 147 read with section 144B of the Act assessing the total income of the Petitioner at Rs. 3,36,98,771/- by making additions of Rs. 1,90,25,355/- under section 68 of the Act. It was only when the Petitioner logged into its e-filing account in October 2021 to download the relevant papers to send to its Advocate for drafting the Writ Petition, did it notice a show cause notice (2nd show cause notice) dated 28th September 2021 [digitally signed at 19.20 hrs] providing the variations as per the draft assessment order. 5. The learned Counsel for the Petitioner submits that the final assessment order dated 30th September 2021 passed by the assessing officer is without jurisdiction in as much as the same has been passed without serving upon the Petitioner a draft assessment order as envisaged under section 144B(1)(xvi) of the Act. The issuance of a draft assessment order is mandatory in terms of the Faceless Assessment Scheme as incorporated in section 144B of the Act and the non-issuance of the draft assessment order is a jurisdictional defect and therefore, the impugned order deserves to be set aside is the submission. Reliance is placed on the judgement of this Hon’ble Page 3 of 5 JUNE 11, 2025 Aswale

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Court in Rinku R. Rai v. ITO (454 ITR 33)(Bom). Further, the Petitioner submits that the 1st show cause notice did not provide any variations as per the draft assessment order making it impossible for the Petitioner to furnish any reply and the Petitioner was unaware of the 2nd show cause notice until accessing the portal in October 2021. However, in any event both the show cause notices granted only time of 1 day to furnish a response. The Counsel for the Petitioner submits that Standard Operating Procedure (‘SOP’) issued by CBDT on 3rd August 2022 provides time of 7 days to respond to the show cause notice and Respondent No. 1 has acted in breach of the SOP under section 144B of the Act. 6. In the Affidavit in reply, the Respondents have not disputed that the show cause notice proposing variations was issued on 28th September 2021 and time given to reply was till 29th September 2021 and the assessment order was passed on 30th September 2021. Mr. Akhileshwar Sharma, the learned Counsel for the Respondents agrees that the show cause notices granted just one days time to the Petitioner to furnish its response. 7. In view of the above, it is apparent that the Respondents have acted in violation of the principles of natural justice by granting insufficient time of just 1 day to the Petitioner to respond to the show cause notices proposing variations. Page 4 of 5 JUNE 11, 2025 Aswale

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8.

In these facts and circumstances, and without going into the merits of the case and other contentions, we deem it appropriate to set aside the assessment order. We, accordingly, hereby set aside the assessment order dated 30th September 2021 and remand the matter back to Respondent No. 1 to pass a fresh de novo order after providing an opportunity of hearing to the Petitioner. Such exercise shall be completed within 12 weeks from the date of uploading of this order. The Petitioner is directed to communicate this order to Respondent No. 2 who is the jurisdictional assessing officer within a period of seven days of it being uploaded. We clarify that we have not expressed any opinion on the merits of the matter. 9. With the aforesaid directions, the above Petition is disposed of. No order as to costs. 10. This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order. [FIRDOSH P. POONIWALLA, J.] [B. P. COLABAWALLA, J.] Page 5 of 5 JUNE 11, 2025 Aswale

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