In a recent development, the Bombay High Court has expressed strong disapproval of the functioning of income tax (IT) assessing officers and their handling of delayed assessment orders. The court has issued a stern warning that it may impose costs on the assessing officers if they are found to be unreasonably pursuing taxpayers with delayed assessment orders, leaving them with insufficient time to respond.
The Court's Displeasure
A division bench of Justices KR Shriram and Kamal Khata condemned the delays in a recent case and emphasized the need for the Central Board of Direct Taxes (CBDT) to sensitize its officers to ensure fair treatment of taxpayers.
The Court went so far as to state, "It is the most unfortunate stand being taken by the Union of India through its officers which requires to be condemned, which we hereby do. We hope the CBDT would sensitise 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 Case in Question
The High Court's concerns arose during a plea by Ajay Securities Pvt Ltd, seeking the quashing of an IT draft assessment order. The Court quashed the order, which had been served with a significant six-month delay, providing the assessee (the company) with a mere three days to respond.
The company claimed that it had duly 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, only addressing it on September 3, 2021.
Despite the company's efforts and submission of documentary evidence, a draft assessment order was issued on September 23, 2021, giving the company only three working days to respond. The company's requests for a short adjournment and a personal hearing via video conferencing were also denied.
The Court's Verdict
The Court expressed its disapproval of the assessing officer's substantial delay and the inadequate time provided to the company for responding to the draft assessment order. It emphasized the need for assessing officers to work with greater diligence and promptness.
Consequently, the bench quashed the assessment order and sent the matter back to the Jurisdictional Assessing Officer with instructions to conduct a fresh assessment after hearing the assessee. This case serves as a reminder of the importance of fair and timely treatment of taxpayers by income tax authorities.
CAclubindia
