Bombay High Court Cautions Tax Officers against Delays in Serving Assessment Orders on Taxpayers

Bombay High Court Cautions Tax Officers against Delays in Serving Assessment Orders on Taxpayers

Expects the Central Board of Direct Taxes to apprise officials to act perceptively

The Bombay High Court has warned of penalizing income tax assessing officers if they’re found harassing taxpayers with delayed assessment orders that leave taxpayers with little time to respond.

In the Ajay Securities Pvt Ltd vs The Income Tax Officer and Ors case, a bench of Justice KR Shriram and Justice Kamal Khata condemned such delays and emphasized that the Central Board of Direct Taxes (CBDT) needed to sensitize its officers to ensure that the taxpayers were treated fairly.

The court stated, "It is 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 sensitize its officers so that they do not treat the 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.”

It quashed an income tax draft assessment order, served after a six-month delay, leaving the assessee company with a response time of only three days.

The company alleged that on 9 and 16 March 2021, it responded to a notice from the income tax authorities under Section 142(1) of the Income Tax Act, 1961. However, the assessing officer did not act on the response for six months until 3 September.

The company argued that on receiving the notice, it submitted documentary evidence and inquired whether further details were required. However, despite such efforts, a draft assessment order was issued to it on 23 September. The company was provided only three working days to respond. Its requests for a short adjournment and a personal hearing through video conferencing were also denied.

While criticizing the assessing officer for the delay and offering little time to the company to respond, the judges highlighted that the assessing officers must work with more diligence and alacrity.

The bench quashed the assessment order and remanded the matter back to the jurisdictional assessing officer. It directed the authorities to pass a fresh assessment order after hearing the assessee.

Advocates Dinkle Hariya and Simoni Chouhan, briefed by advocate Rashmi Vyas, appeared for the assessee company.

Advocate PC Chhotaray represented the revenue authorities.