Non-Submission of Documents Led to Best Judgment Assessment: Madras HC Quashes Income Tax Order subject to 15% Deposit [Read Order]

The Madurai bench of Madras High Court has set aside an assessment order passed under Sections 147 read with 144 and 144B of the Income Tax Act, 1961, granting the assessee another opportunity to present documents, subject to depositing 15% of the disputed tax within 30 days.

The petitioner, S. S. Traders had challenged the assessment order dated 11 February 2025, issued pursuant to a notice dated 20 August 2024 under Section 142 of the Act. The order was passed by the fourth respondent assessing authority after the petitioner failed to submit the requested documents, compelling the department to invoke Section 144 for best judgment assessment.

The revenue submitted that the order was issued in order to meet statutory limitation deadlines.

During the hearing, both the petitioner’s counsel and the Senior Standing Counsel for the respondents agreed that the assessee had an alternate remedy under Section 246A, along with the option to seek condonation of delay under Section 249(3).

The court, noting the petitioner’s willingness to now submit the required documents, quashed the impugned order and remanded the matter to the assessing officer for a fresh decision, subject to the deposit of 15% of the disputed tax within 30 days of receiving the order.

Justice C. Saravanan directed that, within this time limit, the petitioner must upload a reply along with the documents earlier not furnished, which had led to the adverse assessment. After the compliance, the assessing officer was directed to pass a fresh order on merits within three months.

However, the Court made it clear that if the petitioner fails to meet these stipulations, the revenue would be free to proceed as if the writ petition had been dismissed at the outset. Accordingly, the writ petition was disposed of.

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