The Madras High Court has taken the Income Tax (I-T) department to task for not allowing tax assesses adequate time to present their cases before finalizing any orders on income tax assessments. This, the court observed, effectively denies them their right to defend.
Justice Krishnan Ramasamy, while delivering the verdict on a petition by Gemini Film Circuit, a cinema production firm, emphasized the core intent of section 144 B of the Income-Tax Act. He highlighted,
“The real intention of section 144 B of the I-T Act is to provide an opportunity to the assessee to be heard before passing any orders.”
He further lamented the frequent violations of the principles of natural justice, stating,
“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.”
Justice Ramasamy advised the department against providing only a brief window for the assessee to respond to show cause notices. He warned that such practices would not only undermine the purpose of the Act but also infringe upon the legal rights of the assesses.
Backing the arguments presented by Advocate Suhrith Parthasarathy on behalf of the petitioner, the judge asserted that a failure to respond to a show cause notice shouldn’t automatically negate the right to a personal hearing. He emphasized the need for a minimum of 21 days for filing a reply, followed by an opportunity for a personal hearing.
The judge further elaborated on the responsibilities of the assessment officer, stressing the importance of a comprehensive inquiry and a detailed final assessment order. He cautioned,
“If any cryptic order is passed without touching upon the queries/contentions of the assessee, ultimately, it would be fatal to the assessee and also cause huge revenue loss to the department.”
Justice Ramasamy’s order culminated in the annulment of the existing assessment order, directing it back to the assessing officer for a thorough review and a comprehensive hearing.
The backdrop of this case revolves around a show cause notice issued to the petitioner on September 11, 2021, with a tight deadline for a reply by September 16, 2021. The petitioner argued that the short timeframe and the subsequent confirmation of tax proposals without further opportunities were in violation of natural justice and contrary to the spirit of section 144 B of the I-T Act, 1961.
Also read- Tension In Gujarat High Court As Judges Engage In Public Disagreement (lawchakra.in)