Delay in Filing Reply to Income Tax Notice due to Incorrect Login Password: Delhi HC quashes Assessment Order [Read Order]

The Delhi High Court quashed assessment order passed without considering the delay in filing reply to income tax notice due to incorrect login password. As claimed by the respondent/revenue, pertaining to the assessment years in question, several notices under Section 148, Section 142(1) of the Income Tax Act as well as show cause notice before making best judgment assessment were issued to the petitioner during the period spread between 17.03.2021 and 12.07.2022. According to the petitioner/assessee, APHV India Investco Private Limited, none of the said notices except notice dated 12.07.2022 issued under Section 142(1) of the Act was received. By way of the said notice, the Assessing Officer requisitioned certain information and directed the petitioner to upload the same on the web portal of the Income Tax Department and also to send the same through email. The petitioner further explained that as its concerned official forgot the password, it could not login to the web portal and it approached the e-filing Manager at efilingwebmanager@incometax.gov. It was stated that after several e-mail exchanges between the petitioner and e-filing team for re-setting the password of the web portal, the request for password re-setting was rejected on the ground that a foreign mobile phone number was not acceptable and the petitioner being a foreign company should obtain Indian mobile phone number for password re-set facility. Realizing that uploading the reply on web portal would take time, the petitioner sent its reply dated 23.08.2022 to the Assessing Officer clarifying that the source of funds in question was the capital contribution from two foreign companies which hold the petitioner company. The printout of email dated sent by the petitioner/assessee specifically claimed that none of the previous notices were received by the petitioner and that the address stated on those notices was not the registered address of the petitioner since the year 2016 hence the petitioner had every intention of complying with the information sought but requested for extension of time not later than 05.08.2022. A Division Bench gave elaborate reasoning for quashing the assessment order that, firstly, it seemed that the Assessing Officer inadvertently overlooked the email reply dated 20.07.2022 of the petitioner, wherein the petitioner not just sought extension of time till 05.08.2022 to respond but also disclosed vital facts pertaining to its case. On account of this clear non-application of mind, the impugned draft assessment orders, the final Assessment Orders and the consequential demand notices cannot be sustained. Secondly, it was noted the notice dated 12.07.2022 under Section 142(1) of the Income Tax Act was clearly vitiated on account of granting hardly three days to the petitioner to respond. Denial of sufficient time to respond was not just an abrogation of jus naturale but the same also infringed clause B(1) of the Standard Operating Procedure dated 19.11.2020 of the Central Board of Direct Taxes (CBDT), according to which normally a response time of 15 days has to be given to the assessee in order to respond to the notice under Section 142 of the Income Tax Act. A Division Bench of Justices Girish Kathpalia and Rajiv Shakdher concluded that “In view of above discussion, all these four writ petitions are allowed and accordingly, the draft assessment orders dated 26.07.2022, final Assessment Orders dated 10.09.2022, the demand notices dated 10.09.2022 and the Penalty Orders dated 30.03.2023 are set aside, remanding the matters back to the Assessing Officer with the directions to afford a fair hearing to the petitioner/assessee in accordance with law after issuing fresh notices under Section 142(1) of the Act.” Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

Delay in Filing Reply to Income Tax Notice due to Incorrect Login Password: Delhi HC quashes Assessment Order [Read Order]

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