Healthcare Global Enterprises Limited V. The Assessment Unit, National Faceless Assessment Centre, Income-Tax Department and Deputy Commissioner of Income Tax, Circle 2(2)(1), Bangalore

WP/16210/2024

AI Insights

In this writ petition, Healthcare Global Enterprises Limited challenged the validity of an assessment order and related documents issued by the Income Tax Department. The petitioner argued that the time provided to respond to the show cause notice was insufficient, leading to hurried replies that did not adequately address the issues raised. The absence of a personal hearing was also contested, as it deprived the petitioner of the opportunity to clarify their responses. The respondents contended that written replies were sufficient and that there was no violation of natural justice. However, the court found that the procedural requirements were not adequately followed, particularly the Standard Operating Procedure which mandates a minimum of seven days for a response to a show cause notice.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 691942 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 22-06-2024
• Assessment Year: misc
• Laws Referred To: Income-Tax Act, 1961, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: E I SANMATI
• Assessee Lawyers: SANDEEP HUILGOL
• Keywords: Assessment Order; Income Tax; Natural Justice; Personal hearing; Writ petition
• Section: 143(3); 144B; 260; 153(6)

Judgement Text

" - 1 - NC: 2024:KHC:22950 WP No. 16210 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 22ND DAY OF JUNE, 2024 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 16210 OF 2024 (T-IT) BETWEEN: HEALTHCARE GLOBAL ENTERPRISES LIMITED A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 HCG TOWERS, NO. 8, P. KALINGA RAO ROAD, SAMPANGIRAMA NAGAR, BENGALURU 560 026, REPRESENTED HERE IN BY ITS MANAGER - TAXATION MR. B.J. RATHNARAJU, ALSO AT : NO.3, GROUND FLOOR, TOWER BLOCK, UNITY BUILDING ANNEXE, MISSION ROAD, BENGALURU -02. …PETITIONER (BY SRI. SANDEEP HUILGOL, ADVOCATE) AND: 1. THE ASSESSMENT UNIT, NATIONAL FACELESS ASSESSMENT CENTRE, INCOME-TAX DEPARTMENT, 2ND FLOOR, JAWAHARLAL NEHRU STADIUM, NEW DELHI-110003. Digitally signed by VIJAYA P Location: HIGH COURT OF KARNATAKA - 2 - NC: 2024:KHC:22950 WP No. 16210 of 2024 2. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2(2)(1), BANGALORE, BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, KORAMANGALA, BANGALORE - 560 095. …RESPONDENTS (BY SRI. E.I.SANMATI, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ASSESSMENT ORDER DTD. 30.04.2024 BEARING DIN NO. ITBA/AST/S/143(3)/2024-25/1064482107(1) PASSED BY THE R-1 UNDER SECTION 143(3) READ WITH SECTION 260 AND 144B OF THE INCOME-TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2021-22 (ANNX-A-1), AND ETC., THIS PETITION COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioner has called in question the validity of the impugned Assessment Order at Annexure-`A-1', computation sheet at Annexure-`A-2', demand notice at Annexure-`A-3' and has also sought for grant of refund that is lawfully due to it. The petitioner has also challenged the notice dated 30.04.2024 at Annexure-`A-4'. 2. Learned counsel for the petitioner would submit that the show cause notice issued on 24.04.2024 had - 3 - NC: 2024:KHC:22950 WP No. 16210 of 2024 directed furnishing of reply by 26.04.2024, which was inadequate time and despite reply being made within short period of time made available, prejudice has been caused as the reply was made hurriedly and subsequently. It is submitted that another reply came to be filed on 28.04.2024. The same was also hurriedly filed as very short time was made available. It is further submitted that in the absence of hearing, the order being passed on 30.04.2024 within two days after reply at Annexure-`P-1' would reflect hurried manner in which the order was passed. It is also submitted that the petitioner also was deprived of personal hearing to make out the clarification in pursuance to its reply dated 26.04.2024 at Annexure- `P-1' and dated 28.04.2024 at Annexure-`Q-1' and in the absence of such hearing to make out clarification, the petitioner has been prejudiced. 3. Learned counsel Sri E.I.Sanmati, appearing for the respondents-Revenue submits that the reply having been made out in writing, and if that were to be so, the - 4 - NC: 2024:KHC:22950 WP No. 16210 of 2024 contention that there has been violation of principles of natural justice cannot be accepted. 4. After hearing both side, it must be noticed that the show cause notice at Annexure-`N', issued on 24.04.2024 at 10.35 hours sought for a reply by 26.04.2024 by 17.00 hours. This by itself is in violation of the Standard Operating Procedure at Annexure-`S'. At N.1.3 of the Standard Operating Procedure, it provides that the response time for show cause notice ought to be seven days. 5. No doubt, in the present case, written response has been made within the time sought for by the Revenue and the first of such reply at Annexure-`P-1' was made on 26.04.2024 and upon subsequent opportunity, another reply was made on 28.04.2024 at Annexure-`Q-1'. However, furnishing of replies within short time can be construed to be replies filed in order to meet the timeline and in case of such replies filed within short time, contention of prejudice due to lack of sufficient time to - 5 - NC: 2024:KHC:22950 WP No. 16210 of 2024 make out a reply and lack of opportunity of personal hearing to make out clarifications, as raised by the assessee, requires acceptance. 6. However, in the present case, learned counsel for the petitioner submits that replies have already been filed at Annexure-`P-1' and Annexure-`Q-1' and petitioner may be afforded an opportunity of personal hearing as the order was passed on 30.04.2024 within less than a week of filing of replies at Annexure-`P-1' and Annexure-`Q-1'. It is submitted that the petitioner may be permitted to have opportunity of a personal hearing to explain his reply and in the event of further clarification sought for, petitioner may be reserved liberty to make out his additional reply or furnish the documents. 7. The contention of the petitioner requires acceptance as the process of consideration of replies cannot be hurried in the light of last date for completion of assessment, which in the present case, was 30.04.2024. The petitioner's reply at Annexure-`P-1' and - 6 - NC: 2024:KHC:22950 WP No. 16210 of 2024 Annexure-`Q-1' requires sufficient consideration and if an opportunity of personal hearing is furnished, not only would the petitioner be in a position to make out clarification, but, it would afford sufficient time for the Assessing Officer to consider detailed replies and to pass the orders. Accordingly, impugned Assessment Order at Annexure-`A-1' and the notice dated 30.04.2024 at Annexure-`A-4' are set aside. The matter is relegated to the stage of providing an opportunity of personal hearing to the petitioner consequent to the replies at Annexure-`P-1' and Annexure-`Q-1'. It is made clear that the authority must take note of the time available under Section *153(6) of the Income Tax Act, so as to avoid passing of an order at the fag end, which, in the present case, has caused prejudice to the assessee. All contentions are kept open. * Corrected vide Court order dated 09.07.2024. - 7 - NC: 2024:KHC:22950 WP No. 16210 of 2024 The petitioner may await necessary intimation from the concerned authority and is at liberty to upload the order of this Court. Writ Petition stands disposed off accordingly. Sd/- JUDGE bk/ List No.: 1 Sl No.: 9 "