Sri Dwaraka Balaji Developers V. Union of India

WP/25577/2021

AI Insights

The case involves Sri Dwaraka Balaji Developers, represented by its partner Chigurinta Narsimha Reddy, challenging an assessment order and a notice of demand issued by the National Faceless Assessment Centre under the Income Tax Act, 1961. The petitioner argued that the assessment order was arbitrary, illegal, and violated principles of natural justice, primarily due to inadequate time provided to respond to a voluminous show cause notice. The High Court found that the two-day response time granted to the petitioner was insufficient and did not meet the requirements of a fair hearing, thus violating natural justice.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 677041 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 11-11-2021
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: N RAJESHWAR RAO
• Assessee Lawyers: T S MURTHY
• Keywords: Assessment Order; Faceless assessment; Income Tax; Natural Justice; Writ of Mandamus
• Section: 144; 143(3); 260; 144(b)

Judgement Text

"HIGH COURT FOR THE S AT H YD E,JfJiDOF TELANGANA (Dpec,at Original Jurisdiction) THURqPAY, THE ELEVENTH DAY OF NOVEMBER TWO THOUSAND AND TWCruTY O-NC*'''\"''' PRESENT THE HON'BLE SRI JUSTIGE UJJAL BHUYAN - AND THE HON,BLE DT. JUSTICE cHILLAKUR SUMALATHA WRIT PETITIO N NO: 2557 7 0F 2021 Between: Sri Dwaraka Balaji Deveroperp,.Egp.bv its-partner, chigurinta Narsimha Reddv. S/o Late Sri Agi Reddy, Abeo +s %;i.:'b;;r;;tionl'i;irt\"uj1\" i\"b.N\".Tji2:ed: 91,,_Yl:qyi Nalar Co[iny] aarapur, Saioornlfi|i-rrl1rirour, nvoe1.J6iJ_sooioodl rerangana PETITIONER AND 1. Union of lndia, throu North Block New De gh the Secretary, Ir,/inistry of Finance, Government of lndia, lhi-1 10001 2. The National-E-Assessment Centre (National Faceless Assessment Centre), of lncome Tax. Rep. By. Additional/JoinUDeputy /Assistant Commissioner of lncome Tax/ lncome Tax Officer, Room No.401, 2nd Floor, E-Ramp, Jawaharlal Nehru Stadium, Delhi -1 10003 3. Commissioner of lncome Tax, Range -9 lT Towers, 10-2-3, AC Guards, Masab Tank, Hyderabad, Telangana 500004 4. The Additional Commissioner of lncome Tax, Range 9, lT Towers, 2nd Floor, AC Guards, Masab Tank, Hyderabad-500004 5. The AssistanUDeputy Commissioner of lncome Tax, Range 9, lT Towers, 2nd Floor, AC Guards, Masab Tank, Hyderabad-500004 6. The lncome Tax Officer, Range (9) Ward (4) lT Towers, 2nd Floor, AC Guards, Masab rank, Hyderabad-500004 ...RESpoNDENrs Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue any Writ or Order or Direction more particularly one in the nature of Writ of Mandamus declaring the action of the 2nd Respondent in issuing the impugned Assessment Order in DIN ITBA/AST/S/14412021-2211035901214(1) dated 21l gt2o21 and the Notice of Demand in DIN ITBA/AST/S/1 5612021- 2211035901238(1) dated 2110912021 demanding tax of Rs.1'90'06,161/- for the Assessment Year 2017-18, being arbitrary, illegal, unjust and without the authority of law and in violation of principles of natural justice and consequently direct the Respondent No.2 to pass a fresh Assessment order for the Assessmenl year 2O17- 1B after providing reasonable opportunity and personal hearing for producing the documents and reply to the Petitioner Company \"\"rffiffider Section 151 cpc praying that in the circumstances stated in the affidavit filed in support of the petition, the High court may be pleased to grant stay of all further proceedings and operation of the impugned order pursuant to Assessment Order in DIN ITBA/AST/S/144t2021-2211035901214(1) dated 21t[gl2[21 and the Notice of Demand in DIN ITBA/AST/S/1 5612021' 2211035901238(1) dated 21togl2}21 demanding tax of Rs 1'90'06'161/- for the Assessment Year 201'7-18, pending disposal of this writ Petition Gounsel for the Petitioner: SRI T' S' MURTHY Counsel for Respondent No. 1: SRI N' RAJESHWAR RAO ASSISTANT SOLICITOR GENERAL cou nser for Respondent Nos. 2 \" .bi:it. H i[53'-I r* The Court made the following: ORDER THE H N'BLE SRI TICE AND B THEH EDR. TI E t AKUR s ATH Heard Mr. T.S.Murthy, leamed counsel for the petitioner and Mr. K.Raji Reddy, learned Senior Standing Counsel for Income Tax for the respondents, who has hled counter affidavit. 2. Challenge made in this writ petition is to the assessment order dated 21.09.2021 passed by National Faceless Assessment Centre i'e', respondent No.2 under Section 144 of the Income Tax Act, 1961 (briefly 'theAct,hereinafter)readwithSections260andl44-BofthesaidActfor the assessment Year 2017-18' 3. In this connection, we may mention that petitioner who is an assessee under the Act, had submitted retum of income for the said assessment year on 16.02'2018 declaring total income of Rs'9'60'890'00 (Rupees nine lakhs, sixty thousand' eight hundred and ninety only)' Thereafter, the retum was subjected to scrutiny' where-after assessment order was passed on 15'09'2019 under Section 144 teadwith Section 143(3) of the Act, in all determining the total income of the petitioner at w.P.NO.25577 0F 2021 O R D E R (Per the Hon,ble Sri Justice Uiial Bhuvan) 2 Rs.43,34,482.00 (Rupees forty three lakhs' thirty four thousand' four hundred and eightY two onlY)' 3.1 A', this stage, petitioner had approached this court by filing w.p.No.282 ctf 2020. By order dated 05.03.2020, this coufi set aside the assessment orcler dated 15.12.2019 and remanded the matter back to the then Assessing Officer to pass a fresh order of assessment in accordance with law. Be it stated that this court had directed the petitioner to file objections and documentary evidence within a period of two weeks from the said order. 3.2. Thr:reafter, notices were issued to the petitioner on 04.02.2021, pursuant to r.r,h ich it filed submission. 3.3. Al1er the assessment jurisdiction of the petitioner was vested with respondert No.2, show cause notice dated 18.O9.ZO2l was issued bv respondent No.2 to the petitioner calling upon the petitioner to show cause as to why the proposed variation should not be made. 4. Learrred counsel for the petitioner submits that the said show cause notice ran into 57 pages and was received on e-mail on ig.09.2021 at 8.40 p.m. after closure of office hours. As per the show cause notice, petitioner was called upon to submit its response through its registered e-filing account by 23:59 hours on 20.09.2021. J 4.1, Leamed counsel for the petitioner submits that only two days time was granted to the petitioner to submit repry to the show cause notice, which itself was a voluminous one. 4.2. According to ,earned counsel for the petitioner the authorised representative of the petitioner was in bereavement as his father had expired. Therefore, petitioner had sought for an adjournment till 25.09.2021, on which date further adjournment was sought for. However, on 26.09.202r, petitioner had filed its detailed reply. 4.3. Without considering the request for adjoumment made by the petitioner, and the subsequent reply hled by the petitioner, impugned assessment order was passed on 21 .09.2021 . 5. In paragraph No.12 of the said order, it has been mentioned that assessee (petitioner) did not respond I fie any submission. Therefore, respondent No.2 proceeded ahead and passed the impugned assessment three crores, forty one lakhs, fifty seven thousand, one hundred and forty only). That apart, notices for initiating penalty proceedings under various provisions of the Act have also been issued to the petitioner. order assessing total income of the petitioner at Rs.3,41 ,57, 140.00 (Rupees 1 6. Without entering into the details' what is staring at the face is that' only two days time was granted to the petitioner to submit its repiy to the show cause notice dated 18.09'2021 ' 7 We have gone though the aforesaid show cause notice and found the same to b<: voluminous, running into more than fifty pages' In the circumstances, granting of only two days time to the petitioner to subrnit its response to tlre proposed variation i addition, in our view, is wholly inadequate ancl does not meet the requirements of fair hearing; thus violative of the principles of natural justice. Needless to say, the impugned order of assessment has adversely affected the petitioner and certainly has civil consequences. In such a situation, it is necessary that adequate opportunity of hearing should be granted to the assessee. The assessing authority should not be seen to be in an extreme hury to conclude the assessment, mcre so, when there is no immediate prospect of the assessment becoming tirne barred. 8. In the circumstances, we feel that petitioner's response dated 26.09.2021 sliould be taken into consideration by respondent No.2 and a personal hearing either physicaliy or through video conferencing be granted to the petitioner before passing a fresh assessment order. 5 Accordingly and in the light of the above, we set aside the impugned order of assessment dated 21,09'2021, and remand the matter which shall take into account the reply of the petitioner dated 26,09,2021' and after affording personal hearing to the petitioner (authorized representative), shali pass a fresh order of assessment for the said assessment year in accordance with law. 10. Al1 contentions are kePt oPen' I I . The authorised representative of the petitioner shall appear before the respondent No'2 on l8'11'2021 at 1l'00 a'm\" where-after' respondent No'2 shall proceed with the matter and pass appropriate order within a period of sixty days thereafter' 12. Writ petition is disPosed of' 13. Interlocutory applications pending, if any' shall stand closed' No order as to costs. //TRUE COPY// i'+;11's s'\"fJJ Cto SD ASSI SECTiON OFFICER '\"'':1,\",ilui\":r'jiiE##nt*?','\"\".1Hi1::'\"\"#$\"#t:,s,t\"#t- of lncome Tax' Roor Delhi -'1 10003 z \"o\"\" cc a iii t s Hllrrtny Advocate toP^u-? ^-sistant Soticitor General (OPUC) 3. one cc to Sri Namavarapu Raieswara 1?l^ll 4. one cc to Sri * Ji;fiffi;' i\"'Lc to' lncome rax(oPUc) 5. Two CD CoPies 6. One SPare CoPY MBc ,. lRd 9. back to the respondent No.2 - National faceless Assessment centre, Delhi, HIGH COURT DATED: 1111112021 1H E SiA f:' 2 5 NW ?llr1 ( , o ORDER WP.No.25577 of 2021 DISPOSING OF THE WRIT PETITION 1( WITHOUT COSTS ^}- "