SAMERENDRA KUMAR MOHAPATRA V. INCOME TAX OFFICER,NATIONAL FACELESS ASSESSMENT CENTRE,DELHI

WP(C)/11877/2023

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The case involves Samarendra Kumar Mohapatra, the petitioner, challenging an assessment order made by the Income Tax Officer, National Faceless Assessment Centre, Delhi, under section 147 read with section 144-B of the Income Tax Act, 1961, for the assessment year 2018-2019. The petitioner argued that the show cause notice issued on 24th February, 2023, did not provide adequate time for response as mandated by the standard operating procedure (SOP) issued by the Central Board of Direct Taxes (CBDT). The respondent contended that the SOP was for departmental use only and that the petitioner had sufficient opportunity to respond, which he did by uploading a reply on the portal. The court found that the petitioner was not given the minimum seven days response time required by the SOP, leading to a violation of natural justice.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 747525 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 31-08-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: T K SATAPATHY
• Assessee Lawyers: S RAY
• Keywords: Assessment Order; Natural Justice; Reopening; Show cause notice; Response time
• Section: 147; 144(b)

Judgement Text

" IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.11877 of 2023 Samarendra Kumar Mohapatra …. Petitioner -versus- Income Tax Officer, National Faceless Assessment Centre, Delhi and another …. Opposite Parties Advocates appeared in this case: For Petitioner : Mr. S. Ray, Senior Advocate For Opp. Parties : Mr. T.K. Satapathy, Advocate Sr. Standing Counsel (Revenue) CORAM: JUSTICE ARINDAM SINHA JUSTICE SANJAY KUMAR MISHRA ----------------------------------------------------------------------- Dates of hearing and judgment : 31.08.2023 ----------------------------------------------------------------------- ARINDAM SINHA, J. 1. Mr. Ray, learned senior advocate appears on behalf of petitioner-assessee. He submits, impugned in the writ petition are, inter alia, assessment order dated 24th March, 2023, the assessment made on reopening, under section 147 read with section 144-B of Income Tax Act, 1961 pertaining to assessment year 2018-2019. He WP(C) no.11877 of 2023 Page 2 of 6 straightway takes us to sub-clause (b) of clause (xvi) in sub-section (1) of section 144-B. The sub-clause is reproduced below. “xxx (b) provide an opportunity to the assessee, in case any variation prejudicial to the interest of assessee is proposed, by serving a notice calling upon him to show-cause as to why the proposed variation should not be made; or xxxx” He then demonstrates from standard operating procedure (SOP) dated 3rd August, 2022 issued by Central Board of Direct Taxes (CBDT), clause N.1.3 that response time of seven days from issue of SCN is to be given to the assessee and it may be curtailed, keeping in view the limitation date for completing the assessment. He submits, the limitation aspect was not applicable. His client was entitled to minimum seven days notice to respond to the show cause notice. 2. The show cause notice is dated 24th February, 2023. Mr. Ray demonstrates therefrom, the response was required to be filed by 11.34 hours on 27th February, 2023. The requisition paragraph 3 regarding filing of the response, without the options, is reproduced below. “3. Kindly submit your response through your registered 2-filing account at www.incometax.gov.in by 11.34 hours of 27/02/2023, whereby you may either:-” WP(C) no.11877 of 2023 Page 3 of 6 He submits, law is well settled that directions of CBDT are binding on the department. The minimum response time was not allowed to his client. An attempt at filing better response was made but the portal was closed on expiry of the short time given by the show cause notice. On query from Court, he draws attention to paragraph 3.8 of the petition for the averment. He submits, it is a clear case of violation of principles of natural justice. He seeks interference on submission that it goes to root of the matter and therefore the assessment be set aside for restoration to the Assessing Officer (AO). 3. Mr. Satapathy, learned advocate, Senior Standing Counsel appears on behalf of revenue and submits, the SOP was said to be strictly for departmental use only. Be that as it may, the show cause notice was issued and response duly filed by petitioner as in the portal. Pursuant to the filing, petitioner filed revised return and the proceeding on reopening culminated in said impugned assessment order. Petitioner cannot claim prejudice caused on plea that principles of natural justice had been violated in not having had opportunity to present his case in the reopening proceeding. He submits, the writ petition be dismissed. 4. Contention of petitioner regarding denial of opportunity to present his case is in respect of response to show cause notice dated WP(C) no.11877 of 2023 Page 4 of 6 24th February, 2023. The notice itself indicated reply options. The options are reproduced below. “a. accept the proposed variation; or b. file your written reply objecting to the proposed variation; or c. If required, in addition to filing written reply you may request for personal hearing so as to make oral submissions or present your case. The request can only be made by clicking the Seek Video Conferencing button available against the SCN, in the view notices of this proceeding in the e-proceedings tab on e-filing portal. The request can be made only before expiry of compliance date & time through video conference. 4. In case no response is received by the given time and date, the assessment shall be finalized taking into account the variation(s) stated above.” There is no dispute that a reply to the show cause notice was uploaded by petitioner in the portal. 5. We have perused the response submitted on 27th February, 2023. We reproduce below remarks made in the response by petitioner. “I would request to allow me one week time up to 02.03.2023 to submit my response to the show cause notice as my counsel is out of station and expected to return on 28th February, 2023.” WP(C) no.11877 of 2023 Page 5 of 6 By the response petitioner requested one week’s time up to 2nd March, 2023 to submit response to the sow cause notice on grounds stated. 6. On query from Court Mr. Satapathy submits, it will appear from page 2 in impugned assessment order that the last column in the table mentions final show cause. Date of communication is 23rd February, 2023, date of response 25th February, 2023 and date of compliance 27th February, 2023. Hence, it cannot be said that the issuance and reply to the show cause notice was not considered in making impugned order. 7. We have already reproduced above remark made by petitioner in responding to the show cause notice, immediately on intimation thereof. It appears, petitioner did not wait till date of compliance, eventhough it was less than seven days. Petitioner straightway sought adjournment up to 2nd March, 2023. Conduct of petitioner does not appear thereby to be an attempt to prevent or delay making of the assessment order. In the circumstances, petitioner having had filed revised return earlier does not rob him of opportunity to state his position on the proposed variation to be made, prejudicial to his interest. Facts and circumstances as have emerged, are those which require exercise of extraordinary power of judicial review in restoring to petitioner his opportunity to WP(C) no.11877 of 2023 Page 6 of 6 respond to the show cause notice on variation to be made in the reopening proceeding, as prejudicial to his interest. As such, we set aside impugned assessment order dated 24th March, 2023 and direct revenue to accept petitioner’s response to show cause notice dated 23rd/24th February, 2023, as to be uploaded in the portal by noon of 11th September, 2023. 8. The writ petition is allowed and disposed of. (Arindam Sinha) Judge P.Pradhan (S.K. Mishra) Judge Digitally Signed Signed by: PRASANT KUMAR PRADHAN Designation: Secretary Reason: Authentication Location: High Court of Orissa, Cuttack Date: 31-Aug-2023 19:41:18 Signature Not Verified "