Income Tax Assessment Order passed 5 Hours before Deadline to file SCN Reply: Bombay HC Quashes Revenue Order [Read Order]

The Bombay High Court recently upheld the principles of natural justice, quashing an income tax reassessment order that was passed by the department before the deadline that had been allotted to the petitioner to file their reply to the Show Cause Notice (SCN).

The decision was made by the High Court in a writ petition filed by Sai Kiran Clearing Co. Pvt. Ltd., challenging the reassessment order dated 30.03.2022. An appeal had already been instituted by the petitioner against the order and in the meanwhile, the present writ petition had also been instituted.

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Fenil Bhatt, instructed by Mint and Confreres, stated that a SCN was issued to it on 29.03.2022, providing them time until 23:59 hours on 30.03.2022 to respond. Despite the time allowed, the reassessment order was passed prematurely at 17:22 hours on 30.03.2022, just thirty-seven minutes before the Petitioner submitted its response at 17:59 hours.

The counsel for the petitioner argued that the non-consideration of a timely filed response amounted to an egregious violation of natural justice, alluding to the High Court’s earlier judgment in Mateen Pyarali Dholakia vs. Union of India (2021)  wherein a similarly premature order had been struck down.

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He further undertook that the statutory appeal filed earlier would be withdrawn within 15 days from the date the present judgment is uploaded, and that no objections on the grounds of limitation would be raised if a fresh re-assessment was initiated.

Appearing for the Respondents, N. C. Mohanty contended that the re-assessment had to be completed by 31.03.2022 and asserted that the Petitioner had already acquiesced to proceedings under Section 148. Nonetheless, he requested that in the event that the case is remanded, suitable timelines be prescribed to avoid limitation concerns.

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The division bench of Justice M. S. Sonak and Justice Jitendra Jain observed that the impugned order was passed without considering the Petitioner’s response, despite the response being within the prescribed deadline, thus being violative of the principles of natural justice.

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Accordingly, the High Court set aside the reassessment order and remitted the matter back to the Assessing Officer for a fresh determination, to be completed within three months from the upload of the Court's order. The Court clarified that all contentions on the merits of the reassessment were kept open for future proceedings.

To Read the full text of the Order CLICK HERE

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