ITAT quashes Assessment Order passed on Violation of Principles of Natural Justice [Read Order]

The Mumbai bench Income Tax Appellate Tribunal ( ITAT )quashed the assessment order passed on violation of principle of natural justice.

The Two member bench of Girish Agrawal, ( Accountant Member ) & Sanjay Garg ( Judicial Member ) rendered the above decision after examining the submission of Anil Kochar, Assessee Representative(AR) and Abhijit Kundu, Department Representative ( DR ).

 The assesses Kanchan Vanijya Pvt. Ltd. After filing the return of income assesses, the case was selected  for scrutiny. Thereafter the A.O. passed an order under Section 143(3) of the Income Tax Act determining total income of the assessee at Rs.1,38,60,273/-. The C1T after going through the records initiated proceedings under Section 263 of the Income Tax Act since he observed that the order passed was prejudicial to the interest of revenue and accordingly, passed an order under Section 263 of the Income Tax Act.

Accordingly the CIT set aside the assessment order to the file of the A.O. with a direction to pass a fresh order after considering issues. The A.O. passed an order by disallowing all the three items of expenditure claimed and for which the Pr. CIT has set aside the assessment

Aggrieved by the order assesee filed an appeal before the tribunal.

During the adjudication counsel for assessee argued that the assessment passed by violating the principles of natural justice. Hence the AO has completed the assessment and passed the impugned order prior to the time, though very minimal of 6:30 hrs., which was provided to the assessee despite the fact that the limitation was available upto 31.03.2022.

Counsel for revenue argued that opportunity was given to the assessee by notice under Section 142(1) of the Income Tax Act  on 26.01.2022 which the assessee failed to comply with. Thus, the necessary compliance requirement for making the assessment in passing the impugned assessment order were duly complied with by the Ld. AO.

The tribunal observed that the “Adherence to principles of natural justice is recognized by all civilized States and is of supreme importance when a quasi judicial body embarks on determining disputes between the parties, or any administrative action involving civil consequences is in issue. Natural Justice is the essence of fair adjudication, deeply rooted in tradition and conscience, to be ranked as fundamental.”

 In this case the AO afforded an opportunity to the assessee on 30.03.2022 whereby he himself allowed a time window of 6:30 hrs. and without waiting for this time window passed the assessment order on the same date making the additions/disallowances contested in the appeal.

Therefore the bench confirmed that there was no adequate opportunity for the assessee to make its compliance even though the notice itself stated that assessee could request for personal hearing and also of video conferencing.

Accordingly the two member bench quashed the assessment order passed in violation of the principle of natural justice.

To Read the full text of the Order CLICK HERE

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