Income Tax Department Need Not Entertain Belated Hearing Requests After SCN Deadline: Punjab & Haryana HC

The Punjab and Haryana High Court has held that the income tax department is not required to consider a taxpayer's belated reply or request for a personal hearing after the show-cause deadline has expired, particularly when no extension was sought within time and no sufficient cause was shown for the delay.

“The obligation of the authority is to afford an opportunity, not to ensure that it is availed of,” a bench of Justice Deepak Sibal and Justice Sunish Bindlish observed.

The court was hearing a petition filed by Vikas Bansal challenging an assessment order for the assessment year 2024-25. The National Faceless Assessment Centre (NFAC) had issued a show-cause notice on February 24, 2026, requiring him to respond by 5:40 PM on March 1.

Bansal did not respond or seek a personal hearing or an extension within the stipulated period. He claimed that the email notification had escaped his attention. After becoming aware of the notice on March 15, he requested a video-conference hearing the next day and uploaded his reply on March 17.

By then, the income tax department had already generated the income and loss determination proposal (ILDP) on March 13. The final assessment order was digitally authenticated on March 17, after Bansal uploaded his reply.

The court held that the generation of the ILDP marked the closure of the show-cause stage under Section 144B of the Income Tax Act. It clarified that the authority was required to consider a request for personal hearing, a reply or an application for extension when made within the stipulated period.

Explaining the distinction, the bench observed:

“The obligation of the authority to deal with, and to pass a reasoned order on, a request for personal hearing, a reply or an application for extension of time arises where such request, reply or application is made within the time stipulated in the show-cause notice or within the time extended on an application in that regard. Had the assessee sought personal hearing or filed a reply within time, or sought extension within time, the authority would have been bound to deal with the same and to pass a reasoned order thereon, and a failure to do so may well have vitiated the assessment. The position is materially different where the assessee allows the stipulated time to lapse, seeks no extension and approaches the authority only after the show-cause stage has been closed and the assessment has moved on to the subsequent stages. In such a situation, the authority is justified in proceeding with the assessment keeping in view the timelines for its completion, and cannot be faulted for not passing a reasoned order on the belated request or reply.”

The court added,

“Where a reply, a request for personal hearing or an application for extension is made within the time granted, the authority is bound to deal with it and to pass a reasoned order thereon. On the failure of the assessee to do so, the assessing authority may proceed in accordance with the mandate of clauses (xiv) and (xv) of Section 144B(1), that is, upon failure of the assessee to respond to the notice within the prescribed time, prepare the income or loss determination proposal taking into account all relevant material available on record, and proceed to complete the assessment. Once the authority has so proceeded, it is not bound to revert to the show-cause stage, or to pass a reasoned order, on a request for VC or a reply made thereafter, where no extension was sought within the time granted and no sufficient cause has been shown for the failure to act within time.”

The court rejected Bansal's explanation that he had inadvertently missed the email. It noted that he had actively participated in the assessment proceedings and had responded to a notice under Section 142(1) just a day before the show-cause notice was issued.

Dismissing the petition, the court clarified that its observations were confined to the challenge based on denial of natural justice. Bansal could pursue the statutory appeal against the assessment order.

For Petitioner: Advocate Nikhil Goyal

For IT Dept: Senior Standing Counsel Gauri Neo Rampal Opal