Night-Time Notice, 1-Day Deadline? ITAT Calls Out Income Tax Dept's Rush, Grants Relief in TDS Dispute [Read Order]

The Income Tax Appellate Tribunal (ITAT), Agra Bench, has slammed the tax department for issuing a show-cause notice late at night and giving just one day to respond, calling the rushed process unfair and against natural justice.

The case involved HMA Agro Industries Limited, an Agra-based company, which had been slapped with a demand of over ₹5.16 crore for alleged non-deduction or short deduction of TDS. The dispute arose after the Assessing Officer issued a detailed show-cause notice on March 25, 2021, at 9:39 PM, asking the company to submit its reply by the very next day, March 26.

The assessment order was then passed on March 30, 2021, confirming the demand. The company argued before the ITAT that such a tight deadline made it impossible to gather voluminous records and documents needed to verify TDS obligations properly.

The ITAT bench, comprising Judicial Member Sunil Kumar Singh and Accountant Member Brajesh Kumar Singh, agreed with the company’s contention. The tribunal noted that issuing a notice late in the evening and expecting a full-fledged reply within hours was unreasonable, especially when the matter involved complex TDS verification.

The members pointed out that the Assessing Officer failed to conduct a proper examination of facts before concluding that the company was in default.

Additionally, the tribunal observed that theCommissioner of Income Tax (Appeals) [CIT(A)] had dismissed the company’s appeal without properly addressing the merits, violating Section 250(6) of the Income Tax Act, which requires appellate authorities to provide reasoned decisions. The ITAT stressed that even if the assessee had not filed written submissions, the CIT(A) was still obligated to examine the case fairly.

The bench set aside the orders of both the Assessing Officer and the CIT(A), directing the tax department to re-examine the matter after giving HMA Agro Industries adequate time to present its case with supporting documents.

The tribunal set aside an order holding HMA Agro Industries Limited as an "assessee in default" for alleged TDS lapses and directed a fresh hearing, emphasizing that taxpayers must get reasonable time to defend their case.

The case will now go back to the Assessing Officer for a fresh hearing, ensuring the company gets a fair chance to defend itself. In conclusion the appeal was allowed for statistical purposes.

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