Taxpayers Have Independent Statutory Right To File A Reply To Show Cause Notice And Draft Assessment Order: Delhi High Court

The Assessing Officer had extended the timeframe for filing objections to the show cause notice and draft assessment order dated April 22nd, 2021, from April 26th, 2021, to May 17th, 2021. The Assessing Officer proceeded to pass the assessment order dated May 23, 2021 under Section 143 (3) read with Section 144B of the Income Tax Act, 1961, in violation of the principle of natural justice.

The petitioner contended that it was unable to file a reply due to the lockdown imposed in the NCT of Delhi on April 19th, 2021 due to the COVID-19 pandemic. He emphasises that for reasons beyond the petitioner's control. Due to the COVID-19 pandemic, non-accessibility to login credentials and material documents, and unavailability of the Chartered Accountant, the petitioner could not file objections and produce records and documents before the NFAC. The NFAC ought to have granted more time to the petitioner for filing the reply.

The department contended that the assessee has an alternative efficacious remedy of filing an appeal before the Commissioner of Income Tax (Appeals). The assessee concealed the fact it did not file its reply to the show cause notice and draft assessment order. There was no violation of the principle of natural justice as the petitioner had filed its responses on more than five occasions previously.

The court noted that there had been a violation of the principle of natural justice as the petitioner was unable to reply to the show cause notice and draft assessment order due to the COVID-19 pandemic. The assessee's Chartered Accountant has filed an affidavit confirming that he was unable to provide the assessee with the login credentials of the Income Tax E-Portal as the official records as they were maintained in his office and he was unable to access them due to the COVID-19 pandemic.

"This Court also takes judicial notice of the difficulties faced by society, in general, and the assessees, in particular, in filing replies to show cause notices. This Court is further of the view that the filing of earlier replies is of no relevance as the petitioner had an independent statutory right to file a reply to the show cause notice and draft assessment order. Consequently, in the present case, there has been a violation of the principle of natural justice," the court said.

The court held that an alternative remedy is not a bar to the exercise of the writ jurisdiction of the High Court if the writ petition is filed for enforcement of a fundamental right protected by Part III of the Constitution.

Case Title: Ketan Ribbons Pvt Ltd Vs National Faceless Assessment Centre Delhi

Citation: 2022 LiveLaw (Del) 498

Dated: 18.05.2022

Counsel For Petitioner: Advocate Mani Bhadra Jain

Counsel For Respondent: Senior Standing Counsel Abhishek Maratha

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