PRIME ASSET RECONSTRUCTION COMPANY LIMITED vs. CENTRAL BOARD OF DIRECT TAX & ORS.

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W.P.(C)/8068/2023HC DelhiDLHC01022900202301 June 2023Bench: HON'BLE MR. JUSTICE RAJIV SHAKDHER,HON'BLE MR. JUSTICE GIRISH KATHPALIA3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the assessment order dated 03.05.2023 was vitiated due to the non-consideration of the petitioner's reply dated 04.04.2023 and the denial of a hearing, despite a specific request. The Court found that the record supported the petitioner's claim that neither the reply was taken into account nor was a hearing granted. Therefore, as the best way forward, the Court decided to set aside the impugned assessment order. The matter was relegated to the stage of the show-cause notice dated 03.03.2023 and the reply filed by the petitioner. The Assessing Officer was directed to issue a notice to the petitioner indicating the date and time of hearing, permit representation by an authorized representative, and pass a speaking order that addresses the contentions raised in the petitioner's reply. A copy of this speaking order was to be furnished to the petitioner. The writ petition was disposed of in these terms.

What were the facts?

The petitioner, Prime Asset Reconstruction Company Limited, filed a writ petition before the Delhi High Court challenging an assessment order dated 03.05.2023 passed under Section 143(3) read with Section 147 and 144B of the Income Tax Act, 1961, along with a demand notice dated 03.05.2023 under Section 156. The petition also challenged earlier notices and orders, including a notice dated 24.05.2021 under Section 148A(b), a letter dated 30.05.2022 under Section 148A(b), an order dated 25.07.2022 under Section 148A(d), and a consequential notice dated 25.07.2022 under Section 148. The petitioner argued that a show-cause notice dated 03.03.2023 was issued, to which a detailed reply dated 04.04.2023 was submitted, including a request for a hearing. However, the petitioner contended that their reply was not considered, and no hearing was granted before the assessment order was passed.

What were the issues?

1. Whether the assessment order dated 03.05.2023, passed under Section 143(3) read with Section 147 and 144B of the Income Tax Act, 1961, is liable to be set aside for non-consideration of the petitioner's reply and denial of a hearing. Assessee's Contentions: The petitioner argued that their detailed reply dated 04.04.2023, submitted in response to the show-cause notice dated 03.03.2023, was not taken into account by the Assessing Officer (AO) while passing the assessment order. Furthermore, the petitioner contended that despite a specific request for a hearing, albeit via video-conferencing, such a hearing was not granted. This procedural lapse vitiated the assessment order. Revenue's Contentions: The revenue, represented by Mr. Aseem Chawla, Sr. Standing Counsel, accepted notice and did not wish to file a counter-affidavit, agreeing to argue the matter based on the available record. No specific arguments were recorded for the revenue regarding the merits of the petitioner's contentions.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 144B,Section 156,Section 148A(b),Section 148A(d),Section 148

AI-generated summary — verify with the full judgment below

W.P.(C)No.8068/2023 Page 1 of 3

$~51 * IN THE HIGH COURT OF DELHI AT NEW DELHI %

Date of decision: 01.06.2023

+ W.P.(C) 8068/2023

PRIME ASSET RECONSTRUCTION COMPANY LIMITED

..... Petitioner

Through: Ms Smriti Sahay, Advocate.

versus

CENTRAL BOARD OF DIRECT TAX & ORS. ..... Respondents Through: Mr Aseem Chawla, Sr. Standing Counsel with Ms Pratishtha Chaudhary and Mr Aditya Gupta, Advocates.

CORAM:

HON'BLE MR JUSTICE RAJIV SHAKDHER

HON'BLE MR JUSTICE GIRISH KATHPALIA [Physical Hearing/Hybrid Hearing (as per request)]

RAJIV SHAKDHER, J.: (ORAL)

CM APPL. 31047/2023 1. Allowed, subject to just exceptions. W.P.(C) 8068/2023 and CM APPL. 31046/2023 [Application filed on behalf of the petitioner seeking interim relief] 2. Issue notice. 2.1 Mr Aseem Chawla, learned senior standing counsel, who appears on behalf of the respondents/revenue, accepts notice. Digitally Signed By:ATUL JAIN Signing Date:29.06.2023 11:49:30 Signature Not Verified

W.P.(C)No.8068/2023 Page 2 of 3

3.

Given the directions that we propose to pass, Mr Chawla says that he does not wish to file a counter-affidavit in the matter, and he will argue the matter, based on the record presently available with the Court. 3.1 Therefore, with the consent of learned counsel for the parties, the writ petition is taken up for hearing and final disposal, at this stage itself. 4. This writ petition seeks to challenge the assessment order dated 03.05.2023 passed under Section 143(3) read with Section 147 and 144B of the Income Tax Act, 1961 [in short, “Act”]. 4.1 In addition thereto, challenge is also laid to the demand notice of even date i.e., 03.05.2023 issued under Section 156 of the Act. 4.2 Besides this, the petitioner has also laid challenge to the following notices and order: (i) Notice dated 24.05.2021 issued under Section 148A(b) of the Act. (ii) Letter dated 30.05.2022 issued under Section 148A(b) of the Act. (iii) Order dated 25.07.2022 passed under Section 148A(d) of the Act. (iv) Consequential notice dated 25.07.2022 issued under Section 148 of the Act. 5. Ms Smriti Sahay, who appears on behalf of the petitioner, says that prior to the impugned assessment order being passed, a show-cause notice dated 03.03.2023 was issued, proposing variation in income sought to be taxed. It is pointed out, that the petitioner was called upon to respond to the said show-cause notice by 10.03.2023. 5.1 Ms Sahay says, that a detailed reply dated 04.04.2023 was submitted by the petitioner, wherein inter alia, a request was made for grant of hearing, albeit via video-conferencing (VC). Digitally Signed By:ATUL JAIN Signing Date:29.06.2023 11:49:30 Signature Not Verified

W.P.(C)No.8068/2023 Page 3 of 3

5.2 Ms Sahay submits, that while passing the assessment order, the reply filed by the petitioner has not been taken into account. It is also submitted by Ms Sahay, that the hearing was not granted, despite a request being made in that behalf by the petitioner. 6. The record, as presently available with the Court, establishes that neither the reply filed by the petitioner was taken into account, nor was hearing granted to the petitioner. 7. Therefore, according to us, the best way forward would be to set aside the assessment order, and relegate the petitioner to the stage of show-cause notice dated 03.03.2023, and the reply filed qua the said notice. 7.1 It is ordered accordingly. 8. The Assessing Officer (AO) will issue a notice to the petitioner, indicating the date and time of hearing. The AO will permit the petitioner to be represented by an authorised representative. 9. Needless to add, the AO will pass a speaking order, which will deal with the contentions raised by the petitioner in the reply dated 04.04.2023. A copy of the order will be furnished to the petitioner. 10. The writ petition is disposed of in the aforesaid terms. 11. Consequently, pending application shall also stand closed. 12. Parties will act based on the digitally signed copy of the order.

RAJIV SHAKDHER, J

GIRISH KATHPALIA, J

JUNE 1, 2023/ tr Digitally Signed By:ATUL JAIN Signing Date:29.06.2023 11:49:30 Signature Not Verified

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