Bombay High Court warns tax officers over delays in serving assessment orders on taxpayers TAXCONCEPT

The Bombay High Court has warned that it may start imposing costs on income tax assessing officers, if they are found going after taxpayers with delayed assessment orders that leave little time for the taxpayers to respond [Ajay Securities Pvt Ltd vs The Income Tax Officer and Ors.].

A bench of Justices KR Shriram and Kamal Khata condemned such delays and emphasized that the Central Board of Direct Taxes (CBDT) needs to sensitize its officers to ensure that taxpayers are treated fairly.

It is most unfortunate stand being taken by Union of India through its officers which requires to be condemned, which we hereby do. We hope the CBDT would sensitize its officers so that they do not treat assessees in this manner. We think it is high time we start imposing substantial costs to be recovered from the salary of such Assessing Officers,” the Court said.

The Court made these remarks while quashing an income tax draft assessment order, which was served after a six month delay and which eventually left the assessee (a company) only three days to respond.

The assessee company alleged it had responded to a notice from the income tax authorities under Section 142(1) of the Income Tax Act on March 9 and March 16, 2021.

However, the assessing officer failed to act on this response for six months until September 3, 2021.

After receiving a notice dated September 3, the company submitted documentary evidence and inquired whether further details were required.

Despite these efforts, a draft assessment order was issued only on September 23, 2021, giving the company only three working days to respond. Its requests for a short adjournment and a personal hearing through video conferencing were also denied, the Court was told.

The Court criticized the assessing officer for such a delay in taking action and for giving the company only a minimal amount of time to respond to the draft assessment order.

It highlighted that assessing officers must work with more diligence and alacrity.

The Court ultimately quashed the assessment order and remanded the matter back to the Jurisdictional Assessing Officer with directions to pass a fresh assessment after hearing the assessee.

Advocate Dinkle Hariya along with advocate Simoni Chouhan, briefed by advocate Rashmi Vyas appeared for the assessee company. Advocate PC Chhotaray appeared for the revenue authorities.

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