M/S FUJIYAMA POWER SYSTEMS V. THE ASSISTANT COMMISSIONER OF INCOME TAX

CWP/3094/2021

AI Insights

The case involves M/S Fujiyama Power Systems, which filed a writ petition against the assessment order and subsequent notices issued by the Income Tax Department for the assessment year 2018-19. The petitioner contested the assessment order dated 8.4.2021, which was based on deductions claimed under various sections for industrial undertakings. The court's decision was influenced by precedents from the Delhi and Bombay High Courts, emphasizing the necessity of adhering to the principles of natural justice in administrative proceedings.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 672495 (HC-HIMACHAL_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 16-11-2021
• Assessment Year: misc
• Other Referred Cases: Deep Gard vs. Union of India, Zeus Housing Company vs. Union of India
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: VINAY KUTHIALA; VANDANA KUTHIALA
• Assessee Lawyers: DALIP SHARMA; MANISH SHAR MA
• Keywords: Assessment Order; Fair play; Natural Justice; Notice of demand; Penalty proceedings
• Section: 142(1); 143(2); 143(1)(a); 156

Judgement Text

"1 IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA ON THE 16th DAY OF NOVEMBER, 2021 BEFORE HON’BLE MR. JUSTICE TARLOK SINGH CHAUHAN & HON’BLE MR. JUSTICE SATYEN VAIDYA CIVIL WRIT PETITION NO. 3094 of 2021 Between: M/S FUJIYAMA POWER SYSTEMS VILL. NARIYAL, PARWANOO SEC­ 4SOLAN­173220, HIMACHAL PRADESH INDIA THROUGH AMIT PATHANIA SPA/AUTHORISED OFFICER …PETITIONER (BY MR. DALIP K. SHARMA, ADVOCATE AND MR.MANISH SHARMA, ADVOCATE) AND 2 1. THE ASSISTANT COMMISSIONER OF INCOME TAX NATIONAL E­ ASSESSMENT CENTER NEW DELHI 2. THE INCOME TAX OFFICER WARD 37(7),PARWANOO HIMACHAL PRADESH RESPONDENTS (BY MR. VINAY KUTHIALA, SENIOR ADVOCATE WITH MS. VANDANA KUTHIALA, ADVOCATE) This petition coming on for orders this day, Hon’ble Mr. Justice Tarlok Singh Chauhan passed the following: O R D E R Aggrieved by the assessment order made on 8.4.2021 and a consequential notice of demand, issued under Section 156 of the Income Tax Act,(for short, “the Act”) alongwith notice issued for initiating the penalty proceedings in the assessment year 2018­19, the petitioner has filed the instant petition for granting the following substantive relief: “Issue appropriate writ, order or direction, quashing order dated 8.4.2021 and the consequential notice of demand issued under Section 156 along with the notice issued for initiating penalty proceeding dated 8.4.2021 for the Assessment Year 2018­19.” 3 2. Brief facts of the case are that the petitioner filed return of income, declaring its income of Rs. 6,54,01,070/­ on 16.10.2018. The return was duly processed by the respondents under Section 143(1)(a) of the Act. Thereafter, the case of the petitioner was selected for complete scrutiny through CASS vide notice dated 23.9.2019 under Section 143(2) of the Act. The reasons set in the notice was “deduction claimed for industrial undertaking under Section 801A/ 801AB/ 801AC/ IB/ IC/ IBA/ 80ID/ 80IE/ 10A/10AA.” 3. The petitioner complied with the said notice alongwith other various other notices issued by the respondents, under Section 142(I) of the Act by filing its elaborate replies dated 13.10.2019, 01.02.2021 and 01.03.2021. Upon the receipt of the above said replies, the respondent passed an assessment order, intimating the proposed additions to the petitioner on 26.3.2021, of Rs. 5,18,20,934/­.The said draft Assessment Order was accompanied by a show cause notice eliciting a reply from the petitioner of the proposed addition by 1.4.2021. 4. The petitioner on 1.4.2021, through the ITBA portal placed a request for an adjournment before the respondents, seeking 15 days’ time to file its detailed reply, on the proposed additions. However, respondent without accepting or rejecting the 4 request of the petitioner, passed the impugned order dated 8.4.2021, constraining the petitioner to file the instant petition. 5. We have heard learned counsel for the parties and have gone through the material placed on record. 6. A narration of the aforesaid facts, would clearly go to indicate that the impugned assessment order has been made in contravention to the basic principles of natural justice and fair play, inasmuch as the petitioner was not granted an opportunity to file its reply on the proposed additions and a further opportunity of being heard in the matter. 7. Once that be so, obviously, impugned order cannot be sustained. In taking this view, we are duly supported by the judgments rendered by a Division Bench of the Delhi High Court in WP(c) No. 5250 of 2021, titled as Deep Gard versus Union of India, decided on 3.6.2021 and the Division Bench of the Bombay High Court in “Zeus Housing Company versus Union of India”, reported in [2021] 130 taxmann.com 360 (Bombay). 8. In view of the afore discussion, We find merit in this petition and the same is accordingly allowed and the impugned assessment order dated 8.4.2021 alongwith consequential notice of demand and notice for initiating penalty is set aside. However, liberty is given to the respondents to take steps in the matter 5 albeit, as per law by affording an opportunity of being heard to the petitioner, in response to the show cause notice. 9. In view of above, the instant petition is disposed of. Also, the pending application(s), if any, are also disposed of. (Tarlok Singh Chauhan) Judge (Satyen Vaidya) Judge November 16, 2021 Kalpana "