TARANG STOCK BROKING SERVICES PVT LTD vs. UNION OF INDIA AND ORS.

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WPA/7792/2022HC CalcuttaWBCHCA016345202206 May 2022Bench: HON'BLE JUSTICE MD. NIZAMUDDIN2 pages
AI SummaryRemanded

What did the High Court hold?

The Tribunal held that the interest of justice would be served by setting aside the impugned assessment order dated March 25, 2022. The reasoning was that the petitioner had made an attempt to file their reply to the show-cause notice on March 24, 2022, which was prior to the passing of the assessment order. The Tribunal acknowledged the petitioner's claim of technical defects in the department's system and noted that the grievance cell had not responded to the petitioner's complaint. Therefore, the petitioner could not be faulted for the technical issues. The case was remanded to the Assessing Officer to pass a fresh order after considering the petitioner's reply filed on March 24, 2022, and observing the principle of natural justice. The Assessing Officer was directed to pass the fresh order within eight weeks from the date of communication of this order. No issue was expressly left undecided.

What were the facts?

The petitioner, Tarang Stock Broking Services Pvt. Ltd., challenged an assessment order dated March 25, 2022, for assessment year 2015-16. The challenge was based on a violation of the principle of natural justice. The petitioner received a show-cause notice on March 2, 2022, regarding a draft assessment order, with a deadline of March 24, 2022, for submitting objections. The petitioner claims they attempted to submit their response on March 24, 2022, but encountered technical difficulties with the department's e-filing system. Despite highlighting this technical fault to the grievance cell, no response was received, and the Assessing Officer proceeded to pass the final assessment order on March 25, 2022, noting that no response was filed by the assessee.

What were the issues?

1. Whether the assessment order dated March 25, 2022, passed under Section 147 read with Section 144B of the Income Tax Act, 1961, is liable to be set aside on the ground of violation of the principle of natural justice, considering the petitioner's claim of technical difficulties in submitting their response to the draft assessment order. Assessee's contention: The petitioner argued that they attempted to submit their objections to the draft assessment order on March 24, 2022, but were prevented from doing so due to technical faults in the department's e-filing system. They further contended that their grievance regarding this technical issue was ignored by the grievance cell, and the Assessing Officer incorrectly recorded that no response was received, thereby violating the principle of natural justice. Revenue's contention: The judgment does not record any specific contentions made by the revenue.

Which sections of the Income-tax Act were involved?

Section 147,Section 144B

AI-generated summary — verify with the full judgment below

06.05.2022. p.b. Sl. No.21. W.P.A. 7792 of 2022 Tarang Stock Broking Services Pvt. Ltd. Vs. Union of India & Ors. Mr. Avra Mazumder, Mr. Sk. Md. Bilwal Hossain, Mr. Binayak Gupta, Mr. K. Roy. ……..for the petitioner. Mr. Aryak Dutta. ………for the UOI. Both the parties are present. In this writ petition, petitioner has challenged the impugned assessment order dated 25th March, 2022 under Section 147 read with Section 144B of the Income Tax Act, 1961 relating to the assessment year 2015-16, on the ground of violation of principle of natural justice. It appears from record that the assessee petitioner was issued a show-cause notice dated 2nd March, 2022 to make any objection/exception to the draft assessment order and petitioner was asked to submit his response through registered e-filing by 23:59 hours of 24th March, 2022 being Annexure P-1 to the writ petition. It is the case of the petitioner that due to technical fault in the system of the department button for submitting such objection was disabled through which the petitioner made an attempt to give response to the aforesaid draft assessment of 24th March, 2022 but could not succeed and the petitioner had highlighted this technical fault due to which petitioner

2 could not file his objection to the notice of the grievance cell on 24th March, 2022, but, the same was ignored and no response was received by the petitioner against such grievance and the Assessing Officer passed the impugned assessment order on 25th March, 2022 by recording that though assessee was given an opportunity to show-cause against the draft assessment order but no response was received by him which is contrary to record. Since objection to the draft assessment was already sent by the petitioner on 24th March, 2022 to the grievance cell before passing of the impugned assessment order on 25th March, 2022, petitioner cannot be faulted for the technical defect in the system of the department, more so, when the grievance cell has given no response to the petitioner’s grievance, I am of the considered view that the interest of justice will be served if the impugned assessment order dated 25th March, 2022 is set aside by remanding the case to the Assessing Officer concerned to pass a fresh order after taking into consideration the reply to the show-cause notice filed by the petitioner on 24th March, 2022 which appears at page 35 of the writ petition and by observing principle of natural justice, within eight weeks from the date of communication of this order. With this observation and direction, this writ petition being WPA No.7792 of 2022 stands disposed of. (Md. Nizamuddin, J.)

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