Income Tax Offices (ITO)
Income Tax Offices (ITO)
Litigation News

[COVID19] Delhi High Court allows Assessee to reply to Income Tax show-cause notices after lockdown is lifted

Aditi Singh

The Delhi High Court has allowed an assessee-company to reply to the Income Tax show-cause notices, two weeks after the lockdown is lifted by the Government. (BT India Pvt Ltd vs IT Officer)

The order was passed by a Division Bench of Justices Hima Kohli and Subramonium Prasad.

The Petitioner, BT India Pvt Ltd had moved the High Court seeking to quash two Income Tax demand notices dated March 26, 2020, in connection with Assessment Years 2012-2013 and 2013-2014, and the subsequent penalty proceedings initiated by Income Tax Department.

The gravamen of the grievance raised by the Petitioner was the undue haste with which the demand orders were passed by the Income Tax Officer.

The Court was informed that the Notices to show cause was issued on March 17, 2020, seeking necessary explanation on or before March 20, 2020.

The Petitioner submitted that in response to the show-cause notices, an e-mail and a letter were sent on March 19, 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.

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.

In spite of this, the Income Tax Department proceeded to issue another Notice to show cause to the Petitioner on March 23, seeking its compliance on or before March 24.

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 was passed by the Income Tax Department on March 26.

The Court recorded that the "paradoxicality of the observations made by the Income Tax Department in the order was apparent on the face of the record".

It observed that while passing the order dated March 26, 2020, the Income Tax Officer noted that the Assessee had given a reply requesting for an adjournment but proceeded to turn down the request after going through the submissions and the case law cited by the assessee, stating that the same were meritless.

The Counsel for the Department, however, submitted before the High Court that the Income Tax Department would withdraw the March 26 orders and all consequent orders. It was added that an opportunity to the Petitioner to reply to the show-cause notices shall also be afforded.

In view of the above, the Court disposed of the petitions while granting two weeks’ period after the lockdown is lifted to the Petitioner to reply to the Notices.

“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.”
Delhi High Court

The Court nonetheless clarified that the order was passed in the peculiar facts and circumstances of the present case and shall not be treated as a precedent in any other matter.

BT India was represented by AZB & Partners, Senior Partner and Tax Head Deepak Chopra and Counsel Abhimanyu Chopra.

IT Department was represented by Standing Counsel Sunil Agarwal with Advocate Tushar Gupta.

Read the Order:

BT India Common Order.pdf
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