MADHURI SAMEER GOKHALE v. THE ADDITIONAL/JOINT/DY/ASSTT. COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER AND 3 OTHERS
Faceless Assessment - Violation of Section 144B of the IT Act and Principles of Natural Justice; Failure to Consider Assessee's Reply and Grant Reasonable Opportunity.
Court: Bombay High Court
Citation: 2025:BHC-OS:3792-DB
Decision Date: 07-03-2025
List of Laws
Article 226 of the Constitution of India; The Income Tax Act, 1961; Section 144 of the Income Tax Act, 1961; Section 144B of the Income Tax Act, 1961; Section 147 of the Income Tax Act, 1961; Section 142(1) of the Income Tax Act, 1961; Section 156 of the Income Tax Act, 1961; Section 271(1)(b) of the Income Tax Act, 1961; Section 271F of the Income Tax Act, 1961; Principles of Natural Justice
- Facts: The petitioner, Madhuri Sameer Gokhale, filed a writ petition challenging an assessment order dated 29 March 2022 and a demand notice dated 30 March 2022 issued by the National Faceless Assessment Centre (NFAC) under Section 147 read with Sections 144 and 144B of the Income Tax Act, 1961, for Assessment Year 2014-15. The petitioner contended that the assessment was made without following the mandatory procedure under Section 144B of the IT Act, violating principles of natural justice. The petitioner had sought an adjournment to respond to notices issued under Section 142(1) due to the Covid-19 pandemic and her chartered accountant's health issues, but no formal order was passed on her request. Despite filing a detailed reply explaining that the income in question was derived from a family trust and already taxed, the assessing officer proceeded with a best judgment assessment under Section 144.
- Procedural Posture: The case came before the High Court of Judicature at Bombay as a writ petition under Article 226 of the Constitution of India, challenging the assessment order and demand notice. The respondents argued that the petitioner had an alternative remedy of appeal but failed to avail it within the statutory period.
- Issue: Did the assessing officer violate the mandatory procedure under Section 144B of the Income Tax Act, 1961, and principles of natural justice by passing the assessment order without considering the petitioner's request for adjournment and the detailed reply submitted, thereby rendering the assessment order illegal and unsustainable?
- Holding: Yes, the High Court held that the assessing officer violated the mandatory procedure under Section 144B of the IT Act and principles of natural justice. The impugned assessment order and demand notice were set aside.
- Reasoning: The Court reasoned that the assessing officer failed to consider the petitioner's request for adjournment and the detailed reply submitted, violating the principles of natural justice and the mandatory procedure under Section 144B of the IT Act. The Court emphasized that the petitioner was not given a reasonable opportunity to be heard and that the assessing officer acted in breach of the Standard Operating Procedure (SOP) issued under Section 144B, which provides for a response time of seven days to a show cause notice. The Court also noted that the income in question was already brought to tax in the earlier assessment year, and there was no fresh tangible material to justify the reopening of the assessment. The Court relied on previous decisions, including Cheftalk Food and Hospitality Services (P) Ltd. and Jyostna Mehta v. Principal Commissioner of Income Tax, to support its decision. The Court rejected the argument of an alternate remedy, stating that writ petitions under Article 226 can be entertained when jurisdictional requirements are not met.
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