27 Mar Validity of Assessment Orders in Light of Assessee’s Response
The Delhi High Court, in the case of Emco Cables Pvt. Ltd. v. Union of India [W.P. 1622 of 2024, February 27, 2024], addressed the issue of the validity of an assessment order when the Assessee’s response hadn’t been duly considered. The court emphasized the importance of taking into account the Assessee’s reply before issuing an assessment order. It was highlighted that if further details were needed, it was the responsibility of the Revenue Department to request them from the Assessee.
Facts of the case:
The case stemmed from a Show Cause Notice (SCN) dated September 24, 2023, issued by the Revenue Department against Emco Cables Pvt. Ltd. The notice accused the Assessee of under-declaring output tax, claiming excessive Input Tax Credit (ITC), and claiming ITC from canceled dealers and non-taxpayers. The Assessee responded to the notice with a detailed reply. However, the subsequent order dated December 29, 2023 (Impugned Order), found the Assessee’s reply unsatisfactory and directed further action without adequately considering the response.
Issue:
The central issue revolved around whether an assessment order lacking consideration of the Assessee’s response could be deemed valid.
Held:
The Delhi High Court’s ruling in W.P. 1622 of 2024 outlined the following key points:
- Emphasized the obligation of the Proper Officer to thoroughly assess the Assessee's reply before forming an opinion on its sufficiency.
- Noted the failure of the Proper Officer to seek additional details from the Assessee if deemed necessary, rather than dismissing the response outright.
- Criticized the lack of evidence suggesting that the Proper Officer had indeed reviewed the Assessee's submission.
- Set aside the Impugned Order and remanded the case back to the Proper Officer for reconsideration.
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