Supreme Court Issues Notice In Plea Challenging Punjab and Haryana HC Ruling Against AO Consulting Superiors Before IT Assessment

The Supreme Court on Monday issued notice on an appeal by the Income Tax Department against a Punjab and Haryana High Court judgment that held that an Assessing Officer abdicated his quasi-judicial function by repeatedly consulting superior officers before passing an assessment order.

A bench of Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe issued notice on both the application seeking condonation of delay and the Special Leave Petition. The matter is listed next on March 16, 2026.

The appeal arises from a writ petition filed by FinDoc Finvest Private Limited, which had challenged an undated assessment order passed under Section 143(3) of the Income Tax Act for assessment year 2022–23, along with penalty notices issued under Sections 270A and 271AAC.

Allowing the writ petition, the Punjab and Haryana High Court subsequently quashed the assessment order and all consequential proceedings.

The High Court, at the outset, held that the Assessing Officer failed to exercise independent judgment. It recorded that the officer had consulted and discussed the assessment with superior officers on several occasions even before issuing the show cause notice. In particular, the consultations took place on October 26, 2023, January 11, 2024, and March 14, 2024. The show cause notice, however, was issued only on March 11, 2024. Thereafter, the assessment was passed only after obtaining approval from the Joint Commissioner.

In this context, the High Court examined a CBDT circular dated July 15, 2022. It held that while the circular permits approval of assessment orders, it does not authorise prior consultation, guidance, or discussion on the merits of the assessment.

Consequently, the court held that such prior consultation amounted to abdication of statutory discretion and exercise of power under external influence. On this ground, the assessment was held to be vitiated in law

The High Court also went on to examine the grievance of violation of natural justice. It noted that the assessee had specifically requested a personal hearing. However, no hearing was granted. The court, therefore, rejected the revenue's argument that the assessee should have appeared on its own without being given a date. It held that once a personal hearing is sought, a reasonable opportunity must necessarily be provided and cannot be presumed.

Turning next to limitation, the High Court held that the last date for completing the assessment for assessment year 2022–23 was March 31, 2024, under Section 153 of the Act. The assessment order itself carried no date. Moreover, the material on record showed that the assessment was not made on or before March 31, 2024.

The court, therefore, rejected the department's claim that the assessment had been completed in time and uploaded later due to technical issues. It noted that the taxpayer's e-filing portal showed no completed assessment as of April 1, 2024 and that it appeared on the portal only on April 4, 2024.

In these circumstances, and in the absence of any date on the assessment order, the court held that no presumption could be drawn that it had been made within the prescribed limitation period.

Accordingly, the High Court held that the assessment was never completed within the statutory period and set it aside.

For Petitioner/Revenue: Advocate-on-Record Madhulika Upadhyay; Additional Solicitor General Raghavendra P. Shankar; Advocate-on-Record Sudarshan Lamba; Advocate Pallavi Mishra; Advocate B. K. Satija; Advocate Seema Bengani; Advocate Sunita Sharma.