Bombay High Court
Cheftalk Food And Hospitality Services ... vs Income Tax Officer Ward 9 2 1 on 13 August, 2024
Author: G.S. Kulkarni
Bench: G. S. Kulkarni
2024:BHC-OS:12330-DB
904-WP-2919-2024.DOC
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 2919 OF 2024
Digitally
Cheftalk Food and Hospitality Services Pvt. Ltd.
signed by
SHRADDHA
SHRADDHA KAMLESH
A company incorporated in India
KAMLESH TALEKAR
TALEKAR Date:
2024.08.13
having office at A-34-35,
21:59:06
+0530
New Empire Industrial Estate,
Kondivita Road, Andheri E, J.B. Nagar,
Mumbai-400059.
PAN : AAFCC7584D ... Petitioner
Versus
1. Income Tax Officer,
Ward (9)(2)(1) Mumbai
2. The Assessment Unit,
Income Tax Department,
New Delhi-110003.
3. The Union of India
Through its Revenue Secretary,
Department of Revenue, Ministry of Finance,
Mumbai-400020. ...Respondents
Mr. Sandeep Huilgol, for Petitioner.
Mr. Suresh Kumar, for Respondent-Revenue.
_______________________
CORAM: G. S. KULKARNI &
SOMASEKHAR SUNDARESAN, JJ.
Date : August 13, 2024
_______________________
ORAL JUDGMENT (Per, G.S. Kulkarni, J.)
1. This petition under Article 226 of the Constitution of India assails the
Assessment Order dated 27 March, 2024 ("Assessment Order") passed by
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Shraddha Talekar PS
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Respondent No.2 under the provisions of Section 144 read with Section
144B of the Income Tax Act, 1961 ("the Act").
2. The primary grievance as raised by the Petitioner is that prior to the
Assessment Order being passed, the Petitioner was issued a Show Cause
Notice dated 22 March, 2024 ("Show Cause Notice") (Exhibit "G") calling
upon the Petitioner to show cause on the variations which were sought to be
made, in the return of income, as filed by the Petitioner. Paragraph 3 of said
Show Cause Notice recorded that the Petitioner should submit its response
through its registered e-filing account by 17:30 hours of 23 March, 2024.
The said paragraph reads thus :
3. Kindly submit your response through your registered e-
filing account at www.incometax.gov.in by 17.30 hours of
23/03/2024, whereby you may either :-
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.
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3. The Petitioner contends that such notice was generated and uploaded
on the portal on 22 March, 2024 at 20:03:29 IST. Further, the next day (i.e.
24 March, 2024) was a Saturday. The Petitioner objected to the said Show
Cause Notice by its reply dated 23 March, 2024, wherein the Petitioner
stated that the Petitioner being granted less than 24 Hours to respond the
Show Cause Notice, was in breach of the principles of natural justice, which
would amount to a flaw in the decision making process. The relevant extract
of the Petitioner's objection require to be noted :
1......The SCN was issued on 22-03-2024 at 20:03:29 IST and
the assessee was asked to comply to the SCN on 23-03-2024 by
17:30 IST. The assessee was asked to comply to the notice by
providing less than 24 hours time. The assessee submits that
giving less than 24 hours time to reply to SCN is a flaw in
decision making process.
2. The department should have a bonafide intention to
provide fair opportunity to the assessee. The SCN issued at the
fag end of the limitation period curtails the rights of the
assessee. The SCN is issued to provide fair opportunity to the
assessee to put forth his defense and such opportunity should be
extended to the assessee in a real nature.
3. The assessee begs to place reliance on the decision of the
Hon'ble Jurisdictional High Court of Karnataka in the case of
MMG Constructions LLP Vs. Union of India in WP No.
21638/2021 dated 13-12-2021 wherein it was held that allowing
less than 24 Hours to respond to SCN is violation of principles
of natural justice and hence the entire proceedings was quashed
for violation of principles of natural justice."
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4. The Assessing Officer replied to such objections as raised by the
Petitioner, by communication dated 24 March, 2024 addressed to the
Petitioner, which was made available on the Petitioner's portal. Such
communication recorded that as a matter of last opportunity to the Petitioner
to make proper and complete submissions with all documentary evidence,
time to reply to the Show Cause Notice was extended upto 26 March, 2024
upto 11:30 AM. Such intimation was uploaded by the Assessment Unit,
Income Tax Department on 24 March, 2024 at 13:01:43 IST. The
Petitioner, however, could not submit its response within the short extended
time as specified by the communication dated 24 March, 2024. In these
circumstances, the assessment of the Petitioner's return was completed in the
impugned Assessment Order dated 24 March, 2024, being passed by the
Assessing Officer as challenged in the present proceedings.
5. In support of the reliefs prayed in the present proceedings, the primary
contention as urged on behalf of the Petitioner is to the effect that under the
provisions of Section 144B(6)(xi) of the Act, the Principal Chief
Commissioner or the Principal Director General, as the case may be, in-
charge of the National Faceless Assessment Centre, is conferred power to be
exercised with prior approval of the Board, to lay down the standards,
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procedures and processes for effective functioning of the National Faceless
Assessment Centre and the units set up, in an automated and mechanised
environment. It is submitted that in pursuance of such powers, the
Commissioner of Income-tax-1, National Faceless Assessment Centre, Delhi
has notified the "Standard Operating Procedure for Assessment Unit under
the Faceless Assessment provisions of Section 144B of the Act", dated 3
August, 2024 (for short, "the SOP"). Our attention is drawn to the relevant
paragraph of the SOP, being paragraph 'N' of the said order under the
heading "Process of Assessment". Clause N.1.3 thereunder provides that a
period of seven days be given to the assessee for obtaining response from
issuance of Show Cause Notice. The said paragraph reads thus :
N.1.3 To ensure adherence to the principles of natural justice and
reasonable opportunity to the assessee, timelines to be
given for obtaining response to the SCN shall be :
N.1.3.1 Response time of 7 days from the issue of SCN.
1.1.3.2 Response time of 7 days may be curtailed,
keeping in view the limitation date for
completing the assessment.
6. Considering the aforesaid provisions of the SOP, learned counsel for the
Petitioner has submitted that in the present case, such hurried exercise of
passing of the assessment order was arbitrary and in breach of the principles
of natural justice, inasmuch as the time-limit of seven days to respond to the
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904-WP-2919-2024.DOC
Show Cause Notice as specified under the said instructions was not
complied, in passing the impugned Assessment Order. It is submitted that in
such view of the matter, the impugned Assessment Order needs to be
quashed and set aside and the proceedings be remanded for a fresh
assessment order to be passed, after an opportunity being granted to the
Petitioner, to reply to the Show Cause Notice.
7. Mr. Suresh Kumar, Learned Counsel for the Respondents would not
dispute the applicability of the SOP as also to the fact that it was mandatory
under the provisions of the SOP as issued under the provisions of Section
144B(6)(xi) of the Act, to issue a seven days notice to the Petitioner to reply
to the Show Cause Notice. He would submit that as seen from the
documents on record, it cannot be disputed that the assessment order was
passed without such time of seven days being given to the Petitioner to file
objections.
8. Having heard Learned Counsel for the parties and on perusal of the
record, we find much substance in the contention as raised on behalf of the
Petitioner. It may be observed that the SOP, as issued under the provisions
of Section 144B(6)(xi) of the Act, in paragraph N.1.3 clearly provides a
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response time of seven days from the issuance of the Show Cause Notice to
the assessee to submit his reply. In the present case, the Show Cause Notice
was issued on 22 March, 2024. It is also clear that sufficient time was
available to the Assessing Officer to pass an assessment order even if he was
to grant seven days time to the Petitioner to file reply to the Show Cause
Notice. However, the Assessing Officer granted only two days time at the
first instance and thereafter extended the same by another two days, which
apart from being not sufficient, was certainly, not in accordance with the time
to respond the Show Cause Notice, as prescribed under the SOP (supra).
The Assessing Officer, therefore, appears to have arbitrarily exercised
jurisdiction by granting an extension of only two days. In our opinion, such
approach on the part of the Respondents was clearly in breach of the SOP,
which has also resulted in breach of the principles of natural justice, which
guaranteed to the Petitioner a fair and reasonable opportunity to respond to
the Show Cause Notice under the procedure prescribed, in undertaking the
assessment proceedings. This has surely caused a prejudice to the Petitioner.
9. In the light of the above discussion, we are inclined to allow the petition
in terms of the following order :
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(i) The impugned Assessment Order dated 27 March,
2024 (Exhibit K1) is quashed and set aside.
(ii) The proceedings are remanded for a fresh
Assessment Order to be passed under Section 144 read
with Section 144B of the Act.
(iii) Let the portal be opened within a period of two
weeks from today and within a period of seven days
thereafter, the Petitioner shall submit its detailed response
to the Show Cause Notice, raising all the necessary
contentions as the law would permit
(iv) After such response is submitted by the Petitioner, a
fresh Assessment Order be passed by the Respondents in
accordance with law within a period of four weeks, from
the date of the Petitioner uploading its reply to the Show
Cause Notice.
(v) The consequential Computation Sheet dated 27
March, 2024 (Exhibit K2) and Notice of demand dated 27
March, 2024 (Exhibit K3) shall also stand quashed and set
aside.
(vi) All contentions of the parties on the assessment are
expressly kept open.
10. Parties on act on an authenticated copy of this order.
(SOMASEKHAR SUNDARESAN, J.) (G. S. KULKARNI , J.)
August 13, 2024
Shraddha Talekar PS
