Show Cause Notice, Order and Penalty passed during lockdown period quashed as assessee had no opportunity to explain the case.
ABCAUS Case Law Citation:
ABCAUS 3307 (2020) (05) HC
In this case, a Petition was been filed by the assessee praying for quashing the order passed by the Income Tax Officer (Assessing Officer/AO) under Section 201 of the Income Tax Act, 1961 (The Act) for failure to deduct/pay tax deducted at source, along with the demand notice and letter issued u/s 156 of the Act. Prayer was also made for quashing of the penalty proceedings u/s 271C of the Act initiated by the Income Tax Department in pursuant to the said order.
The Petitioner submitted that despite the lockdown due to Covid-19 epidemic, the AO had acted with undue haste in passing the impugned orders knowing very well that the Notices to show cause was issued to the petitioner giving only three days time and calling upon to show cause as to why proceeding should not be initiated u/s 201(1)(1A) of the Act and for seeking necessary explanation from the petitioner
It was submitted that upon receipt of the notice, the petitioner had immediately sent an e-mail and letter requesting for a period of three weeks to respond to the same on account of the lockdown declared by the Government of India across India so as to effectively deal with the Covid-19 pandemic. It was explained by the petitioner that its officers were working from home and they did not have access to the official records to enable them to reply to the show cause notice.
However, despite the aforesaid position, AO proceeded to issue another Notice to show cause requiring compliance with the said notice. Once again, the petitioner sought time to furnish the requisite information and reply to the show cause notice, but to no avail. Finally, the AO passed the impugned order.
The Hon’ble High Court observed that ironically, while passing the impugned order, the Income Tax Officer had noted that the assessee had given a reply requesting for an adjournment but the said request was turned down and thereafter the AO observed that he had gone through the contentions raised in the submissions and the case law cited by the assessee, which were found to be meritless. Thus, the paradox of the observations made in the impugned order was apparent on the face of the record.
Amidst the proceedings before the Hon’ble High Court, the Income Tax Department sought to withdraw the impugned orders passed and all consequent orders and to afford an opportunity to the petitioner to reply to the Show cause notices.
The Hon’ble High Court granted a period of two weeks immediately after the lockdown is withdrawn by the Government, to the petitioner to reply to the Notices to the show cause issued. The Department after receiving replies shall take further steps in accordance with the law.
Before disposing of the appeal, their Lordships clarified that the order had been passed in the peculiar facts and circumstances of the case and shall not be treated as a precedent in any other matter.
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