Delhi High Court in the case of M/s BT India Private Limited in W.P.(C) 2981/2020 & C.M. Nos.10339-41/ 2020 has ordered the Income Tax Department to allow a period of two weeks from the date of withdrawal of lockdown by the government to the assessee to reply to the Notices to the show cause issued by the Income Tax Department.
In this case, the department has withdrawn the impugned order passed by the income-tax authority. The order was passed by a Division Bench of Justices Hima Kohli and Subramonium Prasad.
Read the case details.
Case Title
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M/s BT India Private Limited vs ITO
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Court
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Delhi High Court
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Appeal No./Citation
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W.P.(C) 2981/2020 & C.M. Nos.10339-41/2020
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Section covered
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201
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Order Result
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Appeal allowed. Decided in favour of assessee.
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Date of judgment
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22.04.2020
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Facts of the case:
The Income Tax Department has issued a show-cause notice on 17.03.2020 as to why proceedings should not be initiated against the assessee under Section 201(1)(1A) of the Income Tax Act, 1961 and sought a necessary explanation from the assessee to be filed on or before 20.3.2020. Thereby, only three days time is given to the assessee.
The assessee had immediately sent an e-mail dated 19.3.2020 to the ITO, 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 notices.
The ITO again issued another show cause dated 23.3.2020 to the assessee and required them to comply with the said notice on or before 24.3.2020. This time an only one-day time limit is granted by the ITO to the assessee.
The assessee once again sought time on account of the lockdown situation in the country.
Finally, the ITO has passed an adversarial order on 26.03.2020 and the Demand Notice u/s 156 was also issued. Simultaneously, a show-cause notice was also issued for initiation of penalty proceedings u/s 271C.
APRIL 22, 2020
Download Copy of the Judgment in pdf format.
The Income Tax Department has issued a show-cause notice on 17.03.2020 as to why proceedings should not be initiated against the assessee under Section 201(1)(1A) of the Income Tax Act, 1961 and sought a necessary explanation from the assessee to be filed on or before 20.3.2020. Thereby, only three days time is given to the assessee.
The assessee had immediately sent an e-mail dated 19.3.2020 to the ITO, 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 notices.
The ITO again issued another show cause dated 23.3.2020 to the assessee and required them to comply with the said notice on or before 24.3.2020. This time an only one-day time limit is granted by the ITO to the assessee.
The assessee once again sought time on account of the lockdown situation in the country.
Finally, the ITO has passed an adversarial order on 26.03.2020 and the Demand Notice u/s 156 was also issued. Simultaneously, a show-cause notice was also issued for initiation of penalty proceedings u/s 271C.
Issues:
Against the order, the assessee has filed a writ petition before the Hon’ble Delhi High Court for issuance of a writ of mandamus for quashing the order, demand notice and for quashing of the penalty proceedings initiated by the Income Tax Department under Section 271C pursuant to the order dated 26.3.2020 for AYs 2012-13 and 2013-14.
Against the order, the assessee has filed a writ petition before the Hon’ble Delhi High Court for issuance of a writ of mandamus for quashing the order, demand notice and for quashing of the penalty proceedings initiated by the Income Tax Department under Section 271C pursuant to the order dated 26.3.2020 for AYs 2012-13 and 2013-14.
Arguments of the assessee:
The learned counsel for the petitioner submitted that in response to the show-cause notices dated 17.3.2020, issued by the ITO for the relevant Assessment Years, the assessee had immediately sent an e-mail and letter dated 19.3.2020, 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 submitted 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 notices.
The learned counsel for the petitioner submitted that in response to the show-cause notices dated 17.3.2020, issued by the ITO for the relevant Assessment Years, the assessee had immediately sent an e-mail and letter dated 19.3.2020, 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 submitted 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 notices.
Arguments of the department:
The learned Senior Standing Counsel of the Department submitted that the department would withdraw the impugned orders dated 26.3.2020 passed for the Assessment Years 2012-13 and 2013-14 and all consequent orders and should afford an opportunity to the assessee to reply to the show-cause notices dated 17.3.2020.
The learned Senior Standing Counsel of the Department submitted that the department would withdraw the impugned orders dated 26.3.2020 passed for the Assessment Years 2012-13 and 2013-14 and all consequent orders and should afford an opportunity to the assessee to reply to the show-cause notices dated 17.3.2020.
The Decision:
The High Court has ordered that immediately after the lockdown is withdrawn by the Government, a period of two weeks reckoned therefrom shall be granted to the petitioner to reply to the Notices to the show cause issued by the respondent. Immediately after receiving replies to the Notices to show cause, the respondent shall be at liberty to take further steps in both the matters, in accordance with the law.
The High Court has ordered that immediately after the lockdown is withdrawn by the Government, a period of two weeks reckoned therefrom shall be granted to the petitioner to reply to the Notices to the show cause issued by the respondent. Immediately after receiving replies to the Notices to show cause, the respondent shall be at liberty to take further steps in both the matters, in accordance with the law.
Analysis:
With this order, the impugned order passed by the ITO is impliedly quashed by the High Court since the department expressed its willingness to withdraw the orders. However, the show-cause notice originally issued is kept alive and can be proceeded on. It should be noted that the department has withdrawn the appeal only after an appeal is filed by the assessee. Once the lockdown is lifted, the department will start the proceedings afresh and has to allow two weeks time to the assessee to present its case.
It shows the over-enthusiasm of the income tax officials in disposing of a case against the assessees and totally ignores the principles of natural justice. The order was passed by the ITO in haste for no reason.
However, to avoid the repetition of these type of cases, the CBDT in its Interim Action Plan for the First Quarter (April 2020 to June 2020) of FY 2020-21 dated 8 May 2020 has debarred from issuing any adversarial notices to the assessee by any Income Tax Authority without its approval. CBDT has categorically stated that during the quarter, no communication is to be issued to the assessees having an adverse effect on them till the further guidelines are issued.
With this order, the impugned order passed by the ITO is impliedly quashed by the High Court since the department expressed its willingness to withdraw the orders. However, the show-cause notice originally issued is kept alive and can be proceeded on. It should be noted that the department has withdrawn the appeal only after an appeal is filed by the assessee. Once the lockdown is lifted, the department will start the proceedings afresh and has to allow two weeks time to the assessee to present its case.
It shows the over-enthusiasm of the income tax officials in disposing of a case against the assessees and totally ignores the principles of natural justice. The order was passed by the ITO in haste for no reason.
However, to avoid the repetition of these type of cases, the CBDT in its Interim Action Plan for the First Quarter (April 2020 to June 2020) of FY 2020-21 dated 8 May 2020 has debarred from issuing any adversarial notices to the assessee by any Income Tax Authority without its approval. CBDT has categorically stated that during the quarter, no communication is to be issued to the assessees having an adverse effect on them till the further guidelines are issued.
Full text of the judgment:
IN THE HIGH COURT OF DELHI AT NEW DELHI
W.P.(C) 2981/2020 & C.M. Nos.10339-41/2020
M/S. BT INDIA PRIVATE LTD. .... Petitioner
Through Mr. Deepak Chopra and Mr. Abhimanyu Chopra, Advocates.
Versus
INCOME TAX OFFICER ..... Respondent
Through Mr. Sunil Agarwal, Sr. Standing Counsel with Mr. Tushar Gupta, Advocate.
W.P.(C) 2984/2020 & C.M. Nos.10347-49/2020
M/S. BT INDIA PRIVATE LTD. .... Petitioner
Through Mr. Deepak Chopra and Mr. Abhimanyu Chopra, Advocates.
Versus
INCOME TAX OFFICER ..... Respondent
Through Mr. Sunil Agarwal, Sr. Standing Counsel with Mr. Tushar Gupta, Advocate.
CORAM:
HON'BLE MS. JUSTICE HIMA KOHLI HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD
ORDER
22.04.2020
1. The matters have been heard through Video Conferencing.
2. W.P. (C) 2981/2020 has been filed by the petitioner praying inter alia for issuance of a writ of mandamus for quashing the order, bearing DIN and Letter No.ITBA/COM/F/17/2019-20/1026889793 (1), dated 26.3.2020, passed by the Income Tax Officer for the Assessment Year 2012-2013 under Section 201 of the Income Tax Act, 1961 (in short ‘The Act’), for quashing the demand notice dated 26.3.2020, issued by the Income Tax Officer Ward INT Tax (1) (2), Delhi, vide DIN and Letter No. ITBA/COM/17/2019-20/ 1026890226 (1) dated 26.3.2020, issued under Section 156 of the Act for the Assessment Year 2012-13 raised pursuant to the impugned order dated 26.3.2020 and lastly, for quashing of the penalty proceedings initiated by the respondent/Income Tax Department under Section 271C of the Act pursuant to the order dated 26.3.2020.
3. The connected writ petition, registered as W.P. (C) 2984/2020, has been filed by the petitioner praying inter alia for issuance of the writ of mandamus for quashing the order dated 26.3.2020, bearing DIN and Letter No.ITBA/COM/F/17/2019-20/1026889224 (1) dated 26.3.2020, passed by the Income Tax Officer for the Assessment Year 2013-14 under Section 201 (1) (1A) of the Act, for quashing of the demand notice, bearing No.DIN and Letter No.ITBA/COM/F17/2019-20/ 1026890238 (1), dated 26.3.2020, issued by the Income Tax Officer Ward INT Tax (1) (2), Delhi, under Section 156 of the Act dated 26.2.2020 for the Assessment Year 2013-14 pursuant to passing of the impugned order dated 26.3.2020. Lastly, the petitioner seeks quashing of the penalty proceedings initiated by the respondent/Income Tax Department under Section 271C of the Act, pursuant to passing of the order dated 26.3.2020.
4. The gravamen of the grievance raised in both the petitions is that the respondent has acted with undue haste in passing the impugned orders in both the matters knowing very well that the Notices to show cause was issued to the petitioner on 17.3.2020, calling upon it to show cause as to why proceeding should not be initiated against it under Section 201 (1) (1A) of the Act and for seeking necessary explanation from the petitioner on or before 20.3.2020. Mr. Chopra, learned counsel for the petitioner submits that in response to the show cause notices dated 17.3.2020, issued by the respondent for the relevant Assessment Years, the petitioner had immediately sent an e-mail and letter dated 19.3.2020, 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 notices.
5. It is submitted that despite the aforesaid position, the respondent proceeded to issue another Notice to show cause dated 23.3.2020 to the petitioner and they were required to comply with the said notice on or before 24.3.2020. Once again, the petitioner sought time to furnish the requisite information and reply to the show cause notice, but to no avail. Finally, the impugned order dated 26.3.2020 came to be passed by the respondent.
6. Ironically, while passing the impugned order dated 26.3.2020, the Income Tax Officer has noted in para 3 that the assessee has given a reply requesting for an adjournment but the said request was turned down and thereafter, in para 5, gone on to observe 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. The paradoxicality of the aforesaid observations made in the impugned order is apparent on the face of the record.
7. At this stage, Mr. Sunil Aggarwal, learned Senior Standing Counsel of the respondent/Department submits on advance instructions that the respondent will withdraw the impugned orders dated 26.3.2020 passed in respect of the petitioner for the Assessment Years 2012-13 and 2013-14 and all consequent orders and shall afford an opportunity to the petitioner to reply to the Show cause notices dated 17.3.2020.
8. Immediately after the lockdown is withdrawn by the Government, a period of two weeks reckoned therefrom is granted to the petitioner to reply to the Notices to the show cause issued by the respondent. Immediately after receiving replies to the Notices to show cause, the respondent shall be at liberty to take further steps in both the matters, in accordance with law. 9. Both the petitions are disposed of alongwith the pending applications in terms of the aforesaid statement made by the learned Senior Standing Counsel of the respondent/Department and the order passed above. It is made clear that the aforesaid order has been passed in the peculiar facts and circumstances of the present cases and shall not be treated as a precedent in any other matter.
HIMA KOHLI, J
SUBRAMONIUM PRASAD, J
APRIL 22, 2020
Download Copy of the Judgment in pdf format.
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