RAHUL BIALA vs. INCOME TAX OFFICER WARD 61(1) DELHI & ANR.

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W.P.(C)/6038/2022HC DelhiDLHC01014417202229 April 2022Bench: HON'BLE MR. JUSTICE MANMOHAN,HON'BLE MR. JUSTICE DINESH KUMAR SHARMA3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the eight-hour period provided for the petitioner to file a reply to the show cause notice was neither reasonable nor effective. Within such a short timeframe, the petitioner could not have adequately supplied the relevant information and documents to substantiate his case. Consequently, the Court found a violation of the principles of natural justice. The impugned assessment order dated March 31, 2022, was set aside. The petitioner was directed to file his response to the show cause notice by May 13, 2022. The respondent was directed to pass a fresh assessment order within six weeks thereafter, in accordance with the law. The rights and contentions of all parties were left open.

What were the facts?

The petitioner, Rahul Biala, filed a writ petition challenging an assessment order dated March 31, 2022, passed under Section 147 read with Section 144B of the Income Tax Act, 1961, for Assessment Year 2016-17. The petitioner argued that he was given an unreasonably short period of approximately eight hours to respond to a show cause notice issued on March 30, 2022, at 4:21 PM. This limited time prevented him from gathering necessary details regarding property improvement expenses, Section 54 exemptions, and supporting documents. The revenue, through its counsel, stated that the draft assessment order and show cause notice were issued on March 30, 2022, due to time limitations as the assessment proceedings were set to expire on March 31, 2022. The final assessment order was passed on March 31, 2022, before the assessee could object.

What were the issues?

1. Whether the time granted to the petitioner to file a reply to the show cause notice was reasonable and afforded an effective opportunity to present his case, thereby adhering to the principles of natural justice, in light of Section 144B of the Income Tax Act, 1961? Assessee's Contention: The petitioner argued that the eight-hour window to respond to the show cause notice was insufficient to gather and submit details of expenses, exemptions claimed under Section 54, and supporting documents, rendering the proceedings a mere formality. The time gap between the show cause notice and the assessment order (approximately 22 hours) violated natural justice. Revenue's Contention: The revenue stated that the show cause notice and draft assessment order were issued on March 30, 2022, due to the impending limitation date of March 31, 2022. The final order was passed on March 31, 2022, before the assessee could respond, owing to time constraints.

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 54

AI-generated summary — verify with the full judgment below

W.P.(C) 6038/2022 Page 1 of 3 $~13 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 6038/2022 & C.M.No.18125/2022 RAHUL BIALA ..... Petitioner Through: Mr.Ruchesh Sinha with Ms.Divya, Advocates. versus INCOME TAX OFFICER WARD 61(1) DELHI & ANR. ..... Respondents Through: Mr.Zoheb Hossain, senior standing counsel with Mr.Vipul Agrawal and Mr.Parth Semwal, Advocates. % Date of Decision: 29th April, 2022 CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MR. JUSTICE DINESH KUMAR SHARMA J U D G M E N T MANMOHAN, J (Oral): 1. Present writ petition has been filed challenging the assessment order dated 31st March, 2022 passed under Section 147 read with Section 144B of the Income Tax Act, 1961 (for short ‘ the Act’) for the Assessment Year 2016-17. 2. Learned counsel for the Petitioner states that the Petitioner was not given reasonable time to file reply to the show cause notice which was issued only on 30th March, 2022 at 16:21 p.m. effectively giving the Petitioner only eight hours’ time to file reply to the show cause notice. He Digitally Signed By:JASWANT SINGH RAWAT Signing Date:04.05.2022 10:22:21 Signature Not Verified

W.P.(C) 6038/2022 Page 2 of 3 states that it was not possible to gather all the details of expenses incurred towards improvement of property, details of exemption claimed under Section 54 of the Act and the authentic supporting documents/evidences, which had been referred to in the draft assessment order. 3. Learned counsel for the Petitioner contends 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. 4. Today, on instructions, Mr.Zoheb Hossain, learned standing counsel for the Revenue states that “since the matter was bounded by the limitation of time which got barred on 31st March, 2022, the proposed draft order along with show cause notice for proceedings was issued under Section 147 of the Act on 30th March, 2022 by providing 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.” 5. Having heard learned counsel for the parties, this Court is of the view that time of eight hours to file 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 violation of the principle of natural justice. 6. Accordingly, the impugned order is set aside and the Petitioner is directed to file his response to the show cause notice dated 30th March, Digitally Signed By:JASWANT SINGH RAWAT Signing Date:04.05.2022 10:22:21 Signature Not Verified

W.P.(C) 6038/2022 Page 3 of 3 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. 7. With the aforesaid directions, present writ petition along with pending application stands disposed of. The rights and contentions of all the parties are left open. MANMOHAN, J DINESH KUMAR SHARMA, J APRIL 29, 2022 KA Digitally Signed By:JASWANT SINGH RAWAT Signing Date:04.05.2022 10:22:21 Signature Not Verified

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