'No Pressing Hurry': Delhi High Court Sets Aside Income Tax Order For Curtailing Assessee's Reply Time

The Delhi High Court has set aside an order passed under Section 148A(d) of the Income Tax Act, 1961, after finding that the Assessing Officer (AO) curtailed the assessee's statutory opportunity to respond and subsequently ignored the reply that had been filed before the order was passed.

The Division Bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta observed that the assessee was entitled to 30 days to file its reply, whereas the AO had practically reduced the time available to it to around 15 days.

The Court was hearing a writ petition challenging the Section 148A(d) order dated March 18, 2024 and the consequential notice issued to Petitioner under Section 148 of the Income Tax Act.

The record showed that the assessee was initially issued a notice under Section 148A(b) on February 22, 2024, requiring it to respond by March 3. On that date, the assessee sought an adjournment, following which the AO fixed the matter for March 8.

On March 8, the assessee again sought two weeks' time to file its response. However, the AO granted only two days, requiring the reply to be filed by March 10.

The assessee stated that its accountant was out of station and therefore it could not file the reply within the shortened timeframe. It subsequently sought 15 days' further time by email and ultimately filed its reply on March 15.

Despite the reply having been filed, the AO proceeded to pass the Section 148A(d) order on March 18 without considering the reply.

The Income Tax Department defended the action, arguing that two opportunities had already been granted and that the assessee had failed to file its response by the last date of March 10. It was contended that since the statute prescribed a time limit, the assessee was equally bound to adhere to the time granted by the AO.

The High Court, however, noted that the statutory framework provided an assessee 30 days to file its reply.

“Such being the position,” the Court observed, the AO had sufficient time available to consider the assessee's response, “at least upto 22.03.2024.”

The Court further held that there was “no pressing hurry to eschew petitioner's right to file reply or to confine its right to file reply by 10.03.2024.”

It noted that the assessee had emailed the AO on March 9, one day before the curtailed deadline, seeking two weeks' time. In these circumstances, the AO ought to have granted some further time “so as to serve the ends of justice.”

The Court further pointed out that the assessee's reply had already been uploaded by the time the reassessment order was passed on March 18.

The AO therefore, the Court said, “could very well see and consider the reply so filed before passing an order, but he has chosen not to do so.”

Holding that the AO's approach had “seriously prejudiced petitioner's right”, the Court set aside the impugned action and directed the AO to pass a fresh order after considering the assessee's reply.

For Petitioner: Advocates Ruchesh Sinha & Advocates Monalisa Maity, 

For Respondents: Anurag Ojha, SSC with Hemlata Rawat & VK Saxena, JSCs. Subodh Kumar, SPC