Minimum 7 Days Time Has To Be Granted To The Taxpayer To File Reply To The Show Cause Notice: Delhi High Court
The Delhi High Court Bench of Justice Manmohan and Justice Dinesh Kumar Sharma has held that under Section 148A(b) of the Income Tax Act, a minimum time of seven days has to be granted to the assessee to file reply to the show cause notice.The petitioner/assessee has challenged the Notice issued under Section 148A(b) of the Income Tax Act, 1961 and the consequential order issued...
The Delhi High Court Bench of Justice Manmohan and Justice Dinesh Kumar Sharma has held that under Section 148A(b) of the Income Tax Act, a minimum time of seven days has to be granted to the assessee to file reply to the show cause notice.
The petitioner/assessee has challenged the Notice issued under Section 148A(b) of the Income Tax Act, 1961 and the consequential order issued under Section 148A(d) and notice issued under Section 148 of the Income Tax Act.
The department has issued a notice to petitioner under clause (b) of Section 148A of the Income Tax Act on 22nd March, 2022 on the ground that the petitioner had made cash deposits in its bank accounts but had not filed its Income Tax Return. The Petitioner was asked to furnish a reply to the notice on or before 25th March, 2022. The Petitioner duly replied to the said notice on 25th March, 2022 clearly explaining that all the cash deposited by the petitioner was received from the members of the society. The petitioner had also explained that KYC of all the members were properly done and books of accounts of the Petitioner were duly audited and were furnished to the Registrar of Companies.
The department passed the order under clause (d) of Section 148A rejecting the reply of the Petitioner. The department was of the view that although the petitioner had stated that the cash deposited in the bank account of the Petitioner was received from its members, it had failed to provide the list of members who had given cash to the Petitioner.
The petitioner contended that only three days' time was granted to file its response to the notice. The list of members could not be filed along with the reply as the time granted to the Petitioner to prepare the list and furnish along with its reply was inadequate. The revenue has failed to give a minimum time of seven days to the petitioner to file its reply. Thus, failed to fulfil the criterion of "not less than seven days" as provided in clause (b) of Section 148A of the Income Tax Act.
The department has contended that the Assessing Officer did not issue any corrigendum extending the time limit for filing the reply as no such request was made. As the reply was filed within the time stipulated in the notice dated 22nd March, 2022, no prejudice has been caused to the petitioner.
The court observed that though the petitioner responded to the show cause notice, yet it could not provide all the relevant details and documents, as the time period of three days to respond to the show cause notice was inadequate. Therefore, there has been a violation of the mandatory time period stipulated under Section 148A(b) of the Income Tax Act, causing grave prejudice to the petitioner.
The court quashed the order dated 6th April, 2022 under Section 148A(d) and notice under Section 148 of the Income Tax Act.
Case Title: Shri Sai Co-operative Thrift and Credit Society Ltd Versus ITO
Citation: 2022 LiveLaw (Del) 484
Dated: 12.05.2022
Counsel For Petitioner: Advocate Vineet Bhatia
Counsel For Respondent: Sr.Standing Counsel Sunil Agarwal