CHENNAI: The Madras High Court has rapped the Income Tax (I-T) department for not providing assessees sufficient time to present their cases before orders on assessment are passed and thereby depriving them of the right to defend.
The observation was made by Justice Krishnan Ramasamy recently while pronouncing orders on a writ petition filed by Gemini Film Circuit, a cinema production company, challenging the order of the I-T department on the assessment of tax for 2017-18.
Pointing out that the real intention of section 144 B of I-T Act is to provide an opportunity to the assessee to be heard before passing any orders, the judge said, “... it is very unpleasant to see that in umpteen number of writ petitions, the assessment orders were assailed on the very ground of violation of principles of natural justice- audi alteram partem.”
The petitioner’s case is that a show cause notice was issued to it in 2021 giving just five days, which included a holiday, to file reply. The assessing officer went ahead with a final assessment without giving further opportunity. Concurring with the contentions of advocate Suhrith Parthasarathy, representing the petitioner, the judge said even if the petitioner has failed to file reply/objections to the show cause notice, it would not per se deprive the right for a personal hearing; and at least 21 days initially be given.
The assessing officer shall also conduct a ‘full-fledged enquiry’ and shall deal with the queries/points in detail along with the reasons for rejection of the reply before passing the final assessment order, he directed. “If these aspects are not followed scrupulously, it would pave the way for the assessee to go on an appeal, and then to the high court and the Supreme Court. If the assessment order is set aside, the department will lose its revenue,” the judge said.
“It is the bounden duty of the assessing officer to pass a detailed order and if any cryptic order is passed, it would be fatal to the assessee and also cause huge revenue loss to the department,” Ramasamy said in the order. Setting aside the assessment order, he remanded it to the assessing officer for fresh consideration and pass fresh orders after a full-fledged hearing.