Three Days To Reply To Income Tax SCN Not Reasonable: Gujarat High Court Quashes Assessment

The Gujarat High Court recently held that granting a taxpayer only three days to respond to an income tax show cause notice does not amount to a reasonable opportunity of hearing and violates the principles of natural justice.

Setting aside an income tax assessment order passed after scrutiny proceedings, a Division Bench of Justice A.S. Supehia and Justice Vaibhavi D. Nanavati observed, "Thus, in view of the settled legal position, granting only three days' time to file a reply cannot be said to be a reasonable opportunity. The Assessing Officer ought to have considered and decided the petitioner's grievance dated 16.03.2026, wherein objection was raised regarding the inadequate time granted for filing the reply."

The bench quashed the assessment order and remanded the matter to the Assessing Officer for fresh consideration. It directed the Assessing Officer to give the taxpayer an adequate opportunity of hearing, including a personal hearing wherever permissible in law. The fresh order has to be passed within twelve weeks.

SN Advance Ventures Private Limited filed its income tax return for the Assessment Year 2024-25, declaring an income of about ₹1.05 crore. During scrutiny, the Assessing Officer issued a show cause notice on March 8, 2026, asking the company to respond by March 11.

The company said the notice, issued on a Sunday, effectively gave it only three days to reply. It later filed a grievance seeking a hearing through video conference. After the assessment order was passed without considering its grievance, the company moved the high court.

Counsel appearing for the Income Tax Department argued that the company had filed its reply before the jurisdictional Assessing Officer instead of through the faceless assessment portal, where the proceedings were pending. He submitted that the jurisdictional Assessing Officer had no authority to take cognisance of the grievance or the reply.

The bench noted that there was no dispute that the company had been given only three days to respond to the show cause notice. It found that despite the company filing a grievance seeking a hearing through video conference, the Assessing Officer passed the assessment order without considering the grievance or granting a reasonable opportunity of hearing.

The bench also observed, "The petitioner had also emailed the grievance as well as its reply on 16.03.2026. However, the same has not been considered by the Assessing Officer while passing the impugned assessment order."

Therefore, they quashed the assessment order and directed the Assessing Officer to decide the matter afresh after giving the company an adequate opportunity of hearing, including a personal hearing wherever permissible in law, within 12 weeks.

Counsel for Petitioner: Mr. Jignesh P. Parikh

Counsel for Revenue: Mr. Dev D. Patel, Senior Standing Counsel