Filing revised ITR do not deprive assessee of opportunity to oppose proposed variation

Filing revised return in reply to show cause does not deprive assessee of opportunity to oppose proposed variation

In a recent judgment, Hon’ble High Court of Orissa has held that filing revised return in response to show cause notice does not deprive assessee of opportunity to state his case on the proposed variation to be made, prejudicial to his interest.

ABCAUS Case Law Citation:
ABCAUS 4137 (2024) (07) HC

In the instant case, the assessee had challenged inter alia, assessment order under section 147 read with section 144-B of the Income Tax Act, 1961 (the Act).

In this case, though the response time to SCN proposing variation was less than seven days. By the response petitioner requested one week’s time to submit response to the sow cause notice on grounds that his counsel was out of station.

The Hon’ble High Court observed that the show cause notice proposing the variation to the return income was issued to the assessee giving time of only three days for filing his online response.

The Petitioner/assessee contended that as per sub-clause (b) of clause (xvi) in sub-section (1) of section 144-B, in case any variation prejudicial to the interest of assessee is proposed, then a show-cause notice as to why the proposed variation should not be made should be given to the assessee. Further, as per the Standard operating procedure (SOP) of CBDT dated 3rd August, 2022, the response time of seven days from issue of SCN is to be given to the assessee.

It was submitted that law is well settled that directions of CBDT are binding on the department. The minimum response time was not allowed to his client. An attempt at filing better response was made but the portal was closed on expiry of the short time given by the show cause notice. Thus, it was a clear case of violation of principles of natural justice.

On the contrary, the Revenue submitted that the SOP was said to be strictly for departmental use only. Be that as it may, the show cause notice was issued and response duly filed by petitioner as in the portal. Pursuant to the filing, petitioner had also filed revised return and the

proceeding on reopening culminated in the impugned assessment order. Petitioner cannot claim prejudice caused on plea that principles of natural justice had been violated in not having had opportunity to present his case in the reopening proceeding.

The Hon’ble High Court observed that the assessee did not wait till date of compliance, eventhough it was less than seven days. The assessee straightway sought adjournment up one week. Conduct of petitioner does not appear thereby to be an attempt to prevent or delay making of the assessment order.

The Hon’ble High Court opined that in the circumstances, petitioner having had filed revised return earlier does not rob him of opportunity to state his position on the proposed variation to be made, prejudicial to his interest.

Accordingly, the Hon’ble High Court set aside impugned assessment order and directed revenue to accept petitioner’s response to show cause notice by enabling uploading of response by the assessee. 

Download Judgment ABCAUS 4137 (2024) (07) HC Click Here >>

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