Response sought by AO to SCN

Response sought by AO to SCN

High Court of Karnataka rules that AO's request for a response to a show-cause notice, given less than 24 hours, is arbitrary and in violation of Natural Justice Principles.

Builder, Developer, and Contractor, MMG Constructions is described as a limited liability partnership [LLP]. Under Section 139(4) of the Act, it has filed its income return, which has been processed under Section 143(1) of the Act, for the assessment year under consideration, namely 2018-19. The Assistant Commissioner of Income-Tax (e-Verification) informed the petitioner via notice on 22nd September, 2019 pursuant to Section 143(2) of the Act that the petitioner's case has been selected for scrutiny under the issues relating to "income from real estate business" and "investment in immovable property" and instructed the petitioner to follow the relevant protocol via e-portal.

After receiving a letter from respondent No.4, the petitioner was informed that as on 15th October, 2020, assessment proceedings pending in his case would be conducted under the Faceless Assessment Scheme, 2019 as per the notice under Section 142(1) of the Act. According to the notice on 28th September, 2021 issued by the jurisdictional Assessing Officer under section 142(1) of the Act, the petitioner is required to submit a package of documents and information by 4 p.m. on 29th September, 2021.

K.V.Aravind appearing for the Revenue argues that the voter status of the assessee has resulted in the impugned assessment order being passed, whether the assessee is resident or non-resident. The learned counsel of the assessee is not in a position to disagree the arguments raised by the learned counsel for the assessee in the sense that the notice of the Assessing Officer was issued with less than 24 hours' notice.

The division bench of Justice S. Sujatha and Justice S. Vishwajith Shetty have held that where a response was sought by the Assessing Officer to the show cause notice within 24 hours, it was arbitrary and resulted in intense prejudice. Therefore, without going into the advantages and disadvantages of the case, the mere provision of a reasonable opportunity of hearing to the petitioner, with the liberty to file an additional reply, would suffice in restoring the proceedings to the Assessing Officer.

In addition, if any documents are required, the petitioner - assessee may file an additional reply to the notices issued within four weeks of receipt of the certified copy of the order. Assessments will be considered in accordance with law and assessments will be completed in an expeditious manner," the court said.