DEVYANI FOOD STREET PVT LTD vs. NATIONAL FACELESS ASSESSMENT CENTRE, DELHI

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W.P.(C)/908/2023HC DelhiDLHC01001939202331 January 2023Bench: HON'BLE MR. JUSTICE RAJIV SHAKDHER,HON'BLE MS. JUSTICE TARA VITASTA GANJU3 pages
AI SummaryRemanded

What did the High Court hold?

The Delhi High Court held that the assessment order dated December 16, 2022, was unsustainable. The Court noted that the revenue had not filed a counter-affidavit nor provided any instructions to resist the writ petition, despite being granted an opportunity. Consequently, the Court set aside the impugned assessment order and directed de novo proceedings. The Assessing Officer (AO) was instructed to take into account the petitioner's reply dated December 2, 2022, in response to the show-cause notice dated November 26, 2022. Furthermore, the AO was directed to grant a personal hearing to the authorized representative of the petitioner. The Court clarified that its observations would not impact the merits of the case. The writ petition was disposed of in these terms.

What were the facts?

The petitioner, Devyani Food Street Pvt Ltd, filed a writ petition challenging an assessment order dated December 16, 2022, passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961. The petition also challenged a notice of demand under Section 156 and a penalty notice under Section 274 read with Section 270A, both dated December 16, 2022. The primary grievance was that the assessment order was passed without considering the petitioner's reply dated December 2, 2022, to a show-cause notice dated November 26, 2022. The petitioner had sought an adjournment on December 2, 2022, to file a reply, indicating it might file it before December 5, 2022. The petitioner claims the reply was filed, but the Assessing Officer (AO) apparently overlooked it.

What were the issues?

1. Whether the assessment order dated December 16, 2022, passed under Section 143(3) of the Income Tax Act, 1961, is unsustainable due to a breach of natural justice, specifically by failing to consider the petitioner's reply dated December 2, 2022, to the show-cause notice dated November 26, 2022? (Question of mixed law and fact). Assessee's Contention: The assessment order is bad in law as it was passed without considering the reply filed by the petitioner to the show-cause notice. The petitioner had sought an adjournment to file the reply, and it was indeed filed, but apparently not taken into account by the AO, possibly due to oversight. Revenue's Contention: The revenue, through its counsel, stated on January 25, 2023, that it would take instructions in the matter. On January 31, 2023, the counsel reported no instructions had been received, nor had a counter-affidavit been filed.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144B,Section 156,Section 274,Section 270A

AI-generated summary — verify with the full judgment below

$~28 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 908/2023

DEVYANI FOOD STREET PVT LTD

..... Petitioner

Through: Mr Divyansh Jain, Adv.

versus

NATIONAL FACELESS ASSESSMENT CENTRE, DELHI ..... Respondent Through: Mr Vipul Agrawal & Mr Zoheb Hossain, Sr. Standing Counsel with Mr Parth Semwal, Adv.

CORAM:

HON'BLE MR JUSTICE RAJIV SHAKDHER

HON'BLE MS JUSTICE TARA VITASTA GANJU

O R D E R %

31.01.2023 [Physical Hearing/Hybrid Hearing (as per request)] 1. On the previous date i.e., 25.01.2023, we heard the matter at some length and perused the record. 1.1 After perusing the case papers, we had recorded the following: “2. This writ petition is directed against the assessment order dated 16.12.2022 passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961 [in short, “the Act”]. 2.1. Besides this, challenge is also being made to the notice of demand and notice issued for imposing penalty, both of which are dated 16.12.2022. Notice of demand had been issued under Section 156 of the Act while the notice of imposition of penalty had been issued under Section 274 read with Section 270A of the Act. 3. The principal grievance of the petitioner is that the impugned assessment order has been passed without taking into account the reply dated 02.12.2022 filed by the petitioner vis-à-vis the show cause notice dated 26.11.2022. 4. The petitioner has candidly averred in the petition that in the first instance on 02.12.2022 it had sought an adjournment on the ground that it would require some more time to file a reply.

W.P.(C) 908/2023

page 1 of 3

This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 04/06/2026 at 18:43:35

4.1 . In effect, according to the petitioner, extension of time to file a reply was sought till 05.12.2022 with a caveat that it may file a reply even before the aforementioned date. 4.2 . According to the petitioner, the reply was filed despite a request for adjournment on 02.12.2022. The Assessing Officer, however, it appears, has not taken into account perhaps due to oversight the reply dated 02.12.2022. 5. According to us, prima facie, the assessment order is unsustainable and may have to be set aside. 6. Mr Vipul Agarwal, who appears on behalf of the respondent/revenue, says that he would take instructions in the matter. 7. Accordingly, issue notice. 7.1 . Mr Agarwal accepts notice. 8. In case instructions are received to resist the writ petition, a counter-affidavit will be filed before the next date of hearing. 9. List the matter on 31.01.2023.” 2. Mr Vipul Aggarwal, who appears on behalf of the respondent/revenue, says that he has not received any instructions with regard to the issue crystallised by us on 25.01.2023. 3. As would be evident from the extract of the order dated 25.01.2023, the core issue which arises in the present writ action is, whether the principles of natural justice were breached, inasmuch as the impugned assessment order dated 16.12.2022 passed under Section 143(3) of the Income Tax Act, 1961 [in short “Act”] had been passed without noticing the reply dated 02.12.2022 filed by the petitioner/assessee, to the show-cause notice dated 26.11.2022 served upon him. 3.1 We had, therefore, categorically indicated in our order dated 25.01.2023, that if instructions were received to resist the matter, a counter- affidavit would be filed in the matter.

W.P.(C) 908/2023

page 2 of 3

This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 04/06/2026 at 18:43:35

4.

The position, which obtains today, is that neither a counter-affidavit has been filed, nor have any instructions been received by Mr Aggarwal, as to the issue adverted to in our order dated 25.01.2023. 5. Thus, having regard to the aforesaid, we are of the view that the best way forward would be to set aside the impugned assessment order dated 16.12.2022, with liberty to the Assessing Officer (AO) to carry out de novo proceedings. 5.1 It is ordered accordingly. 6. The AO will take into account, the reply dated 02.12.2022 filed by the petitioner/assessee vis-a-vis the show-cause notice dated 26.11.2022. 7. The AO will also accord a personal hearing to the authorised representative of the petitioner/assessee. 8. We may make it clear, that nothing stated hereinabove will impact the merits of the case. 9. The writ petition is disposed of in the aforesaid terms. 10. Parties will act based on the digitally signed copy of the order.

RAJIV SHAKDHER, J

TARA VITASTA GANJU, J

JANUARY 31, 2023/r

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W.P.(C) 908/2023

page 3 of 3 This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 04/06/2026 at 18:43:35

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