BULI CHEMICALS INDIA PVT. LTD. vs. ASSESSMENT UNIT INCOME TAX DEPT AND ORS

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WP/10642/2023HC BombayHCBM01027977202328 August 2023Bench: HON'BLE SHRI JUSTICE K.R. SHRIRAM,HON'BLE JUSTICE DR. NEELA KEDAR GOKHALE5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the assessment order, demand notice, and penalty notice dated May 27, 2023, were quashed and set aside. The Court found that providing less than 24 hours to respond to a show-cause notice, especially when the assessment completion deadline was September 30, 2023, violated the principles of natural justice. The Court noted that various circulars and provisions mandate at least 7 to 30 days' notice. The Assessing Officer should have been considerate and granted the requested time up to June 10, 2023, given the absence of urgency. The matter was remanded to the Faceless Assessment Officer. The Petitioner is directed to respond to the show-cause notice within two weeks of the portal being opened. The Assessing Officer is to pass a fresh order within eight weeks after providing a personal hearing at least five days in advance. The Assessing Officer must also provide a list of judgments/orders relied upon and any material not previously provided at least seven working days before the personal hearing. The Court explicitly stated that no observations were made on the merits of the case.

What were the facts?

The Petitioner, Buli Chemicals India Pvt. Ltd., is challenging an assessment order dated May 27, 2023, passed under Section 143(3) read with Section 144B of the Income-tax Act, 1961, for Assessment Year 2020-21. Consequential demand and penalty notices, also dated May 27, 2023, are also under challenge. The Petitioner received a show-cause notice on May 12, 2023, digitally signed on May 22, 2023, requiring a response by 12:41 PM on May 23, 2023, providing less than 24 hours. The Petitioner had previously requested an adjournment on March 24, 2023, to submit documents by June 10, 2023, citing a change in management and Board of Directors. Despite this, the assessment order was passed. The Petitioner's request for adjournment on June 20, 2023, was denied due to 'paucity of time', although the assessment completion deadline was September 30, 2023.

What were the issues?

1. Whether the assessment order dated May 27, 2023, passed under Section 143(3) read with Section 144B of the Income-tax Act, 1961, for Assessment Year 2020-21, is liable to be quashed on grounds of violation of principles of natural justice. Assessee's Contention: The Petitioner argued that the show-cause notice issued on May 12, 2023, with a response deadline of less than 24 hours (May 23, 2023), violated principles of natural justice. They also highlighted that their request for adjournment to June 10, 2023, due to management changes, was ignored, and the assessment was completed despite the assessment deadline being September 30, 2023. The Petitioner expressed willingness to provide explanations within two weeks. Revenue's Contention: The Revenue contended that the Petitioner had been given opportunities earlier and did not respond. They also noted that the Petitioner sought an adjournment on June 20, 2023, which could not be granted due to time constraints.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144B

AI-generated summary — verify with the full judgment below

405-aswp-10642-2023.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 10642 OF 2023 Buli Chemicals India Pvt. Ltd. … Petitioner Versus Assessment Unit Income Tax Dept. & Ors. … Respondents Mr. Madhur Agrawal i/by Mr. Atul K Jasani, for Petitioner. Mr. Ajeet Manwani with Samiksha Kanani for Respondent-State. CORAM K. R. SHRIRAM & DR. N. K. GOKHALE, JJ. DATED: 28th August 2023 P.C. : 1. Petitioner is impugning the assessment order dated 27th May 2023 passed under Section 143(3) read with Section 144B of the Income-tax Act, 1961 (“Act”) for the Assessment Year 2020-21 along with consequential demand notice and penalty notice, both dated 27th May 2023. 2. Mr. Agrawal states that Petition was served on 26th June 2023. No reply has been filed till date. Page 1 of 5 Shivgan SHAMBHAVI NILESH SHIVGAN Digitally signed by SHAMBHAVI NILESH SHIVGAN Date: 2023.08.30 12:22:01 +0530

405-aswp-10642-2023.doc 3. In view of the facts and circumstances of the case, we do not feel it necessary to go into the details and the Petition is being disposed at the stage of admission itself. 4. Petitioner received a notice dated 12th May 2023 calling upon Petitioner to show cause as to why variation mentioned therein should not be made to the returns filed by Petitioner. The notice has been digitally signed on 22nd May 2023 at 13:21:58 IST. Petitioner has been given time to respond by 12:41 hour on 23rd May 2023, i.e., less than 24 hours. 5. On 24th March 2023, Petitioner addressed communication to Faceless Assessment Unit requesting for time to prepare details and documents and submit it by 10th June 2023 since Petitioner has been taken over by new management and consequently there was change in Board of Directors also. Despite that assessment order came to be passed on 27th May 2023 making variations mentioned therein. It is also recorded in the impugned assessment order that Petitioner was given time to give final reply to the show- cause notice but Petitioner sought adjournment on 20th June 2023 and adjournment cannot be granted due to paucity of time. There Page 2 of 5 Shivgan

405-aswp-10642-2023.doc is no explanation as to what was the urgency or why there was paucity of time because time for completing assessment was expiring on 30th September 2023. 6. Mr. Manwani submitted that Petitioner had been given opportunity earlier as recorded in paragraph 2 of the impugned order but Petitioner did not respond. Mr. Agrawal in response stated that Petitioner was undergoing transition as mentioned in the adjournment request noted earlier. Mr. Agrawal states that Petitioner was always and is ready and willing to give within two weeks from today explanation to show-cause as to why variation should not be made. 7. In our view, as the time limit was expiring only on 30th September 2023, the Assessing Officer could have been considerate and granted time up to 10th June 2023. In any case, by giving less than 24 hours notice to respond to an Assessee, in our view, would violate the principles of natural justice. There are various circulars issued and in other provisions that provide at least 7 days and up to 30 days notice has to be given. We feel the Assessing Officer, Page 3 of 5 Shivgan

405-aswp-10642-2023.doc since there was no urgency, should have given minimum seven days time to respond. 8. Therefore, we hereby quash and set aside the impugned order dated 27th May 2023 and consequential demand notice and penalty notice also dated 27th May 2023 and remand the matter to Faceless Assessment Officer. Respondents are directed to open the portal to enable Petitioner to respond/file reply to the show-cause notice dated 22nd May 2023 within two weeks of the portal being opened. Thereafter Assessing Officer may pass such order as he deems fit in accordance with law within eight weeks. Before passing any order, personal hearing shall be given to Petitioner, notice whereof shall be communicated to Petitioner at least five days in advance. If Assessing Officer is going to rely on any judgment or order of the Tribunal or a Court, list thereof shall be made available to Page 4 of 5 Shivgan

405-aswp-10642-2023.doc Petitioner along with the notice of personal hearing, so that Petitioner may deal with or distinguish the same. 9. We further make it clear that Assessing Officer shall not rely on any material or intimation or document, copy whereof is not made available to Petitioner at least seven working days before the personal hearing. 10. The Petition disposed. 11. We clarify that we have not made any observations on the merits of the matter. (DR. N. K. GOKHALE, J.) (K. R. SHRIRAM, J.) Page 5 of 5 Shivgan

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