Background of the Case

The matter before the ITAT Panaji Bench involved multiple appeals filed by Rajesh Suhas Verenkar and Riya Rajesh Verenkar for Assessment Years 2013–14 to 2019–20. The Appellant was engaged in civil construction activities, labour contracting, and acting as an agent or broker in processing land allotment applications in Goa. A search and seizure operation under Section 132 of the Income Tax Act was conducted on 19 March 2019, during which certain incriminating documents were seized. Based on these materials and statements recorded during the search, the Assessing Officer initiated assessment proceedings under Sections 153A and 153C of the Act.

The Assessing Officer observed that only around 50–55% of the total business receipts were deposited into the appellant’s bank accounts while the remaining portion was allegedly kept outside the books and used for personal expenses or deposited in accounts of family members. Consequently, the Assessing Officer treated 50% of such alleged suppressed receipts as undisclosed income and made additions while completing the assessments.

Arguments by the Appellant (Assessee)

The Appellant challenged the assessment orders before the Commissioner of Income Tax (Appeals). However, during the appellate proceedings, several hearing notices were issued by the CIT(A). According to the Appellant, the appeals were ultimately dismissed ex-parte without granting a fair and adequate opportunity to present their case or submit supporting documents. The appellant contended before the Tribunal that the appellate authority proceeded without properly considering their submissions and without granting reasonable time to respond to the notices issued.

It was argued that the dismissal of the appeals without meaningful opportunity violated the principles of natural justice and resulted in confirmation of additions without proper examination of the facts and evidence.

Respondent’s Response (Revenue)

The Revenue relied upon the orders passed by the lower authorities and submitted that several opportunities were provided by the CIT(A) during the appellate proceedings. The department contended that notices were issued on multiple occasions and the appellant failed to effectively respond or produce the required evidence to support their claims. Therefore, according to the Revenue, the CIT(A) was justified in proceeding ex-parte and confirming the additions made by the Assessing Officer on the basis of the material available on record.

Court Findings and Decision

The ITAT Panaji observed that although the CIT(A) had issued multiple notices, the time provided to the appellant to respond was significantly short and did not constitute a real or reasonable opportunity of being heard. The Tribunal noted that in several instances less than fifteen days were granted for compliance and both appellants were called upon to represent multiple appeals on the same dates. Relying on various judicial precedents, the Tribunal emphasized that the opportunity of being heard must be real, reasonable, and effective rather than a mere formality. The Tribunal also observed that certain submissions and documents had been placed on the e-portal but were not considered by the appellate authority while passing the ex-parte orders.

Considering these circumstances, the Tribunal held that the principles of natural justice had not been adequately followed and therefore set aside the orders of the CIT(A). The matter was remanded back to the CIT(A) with directions to adjudicate the appeals afresh after providing proper opportunity to the appellant and to pass a reasoned order in accordance with law.

To download official order, Click Here

“The site is for information purposes only and does not provide legal advice of any sort. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute an attorney-client relationship. The information on this site is not intended to be a substitute for professional advice.”

The post ITAT Panaji Rules Opportunity of Hearing Must Be Real, Not a Formality: Appeals Restored to CIT(A) for Fresh Adjudication appeared first on Tax Unplug.

Court’s Key Observations

The Court clarified that Section 73(2) is intended to provide a meaningful opportunity of hearing to the taxpayer. The three-month period is necessary to enable filing of replies, conduct of personal hearings, grant of adjournments, and exercise of the option for voluntary payment under Section 73(5). Any reduction in this statutory time defeats the principles of natural justice.

The Court rejected the department’s argument that the three-month gap applies only when notices are issued close to the limitation period. It held that the requirement applies in all cases, regardless of when the SCN is issued.

Decision of the Court

Since the SCN was issued on 18 November 2024 and the final order was passed on 31 January 2025, the statutory three-month gap was not maintained. Accordingly, the SCN and the final order were quashed, and the matter was remanded for fresh adjudication in accordance with law.

Key Takeaway for Taxpayers

GST adjudication orders passed without observing the mandatory three-month gap under Section 73 are liable to be set aside, even if issued within the limitation period.

To download official order, click here.

“The site is for information purposes only and does not provide legal advice of any sort. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute an attorney-client relationship. The information on this site is not intended to be a substitute for professional advice.”

The post Bombay High Court Mandates 3-Months Gap Between SCN & Issuance of Order Under Section 73 of CGST Act appeared first on Tax Unplug.

M/s.US Electricals,, vs. Revenue [W.P. No. 6262 of 2025]

Background of the Case

The appellant M/s. US Electricals was issued a show cause notice under Section 73 of the GST Act, 2017, citing discrepancies between the turnover declared in the appellant’s GSTR-3B and the TDS deductions shown in Form 26AS of the Income Tax Act. The appellant was requested to submit documents for verification. However, the appellant was unaware of the notice due to a lack of access to the GST portal and only became aware of the notice when informed over the phone by the respondent in December 2023. The appellant responded with a clarification and requested a personal hearing. Subsequently the assessment order passed dated 05.02.2025. The appellant filed the writ petition under Article 226 of the Constitution of India, seeking the quashing of this order and a direction to reconsider the matter afresh.

Arguments by the Appellant

The appellant contended that despite providing a detailed reply to the show cause notice, the respondent passed the assessment order on the same day, without considering the response or offering a personal hearing. This, the appellant argued, was a violation of the principles of natural justice. Furthermore, the appellant filed a rectification application, which was also rejected on 05.02.2025, and the disputed tax liability was recovered by debiting the appellant’s e-credit ledger. The appellant, thus, filed the writ petition to challenge the validity of the order and sought a fresh hearing.

Respondent’s Response

The respondent’s, Revenue acknowledged the procedural lapse. They conceded that the assessment order was passed without providing the appellant an opportunity for a personal hearing and that this was a mistake on part of the authorities. They further suggested that if the court deems it appropriate, the case should be reconsidered in accordance with the proper procedure.

Court Findings and Decision

The Madras High Court observed that the assessment order had been passed without due consideration of the reply filed by the appellant, and more critically, without providing the appellant an opportunity for a personal hearing. The court noted that this action violated Section 75(4) of the Central Goods and Services Tax Act, 2017, which mandates that a personal hearing should be provided before passing an order.

The court emphasized that the appellant was denied the fundamental right to establish their case, thereby infringing upon the principles of natural justice. Consequently, the court decided to set aside the impugned assessment order and directed the respondent to reconsider the case. The respondent was ordered to consider the appellant’s reply and objections, schedule a personal hearing, and pass a fresh order based on the merits of the case. The court directed that this process be completed expeditiously, preferably within three weeks from the receipt of the court’s order.

To download official order, Click Here

Madras HC cancels GST assessment

“The site is for information purposes only and does not provide legal advice of any sort. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute an attorney-client relationship. The information on this site is not intended to be a substitute for professional advice.”

The post Madras High Court Sets Aside GST Assessment Order for Violation of Natural Justice: Personal Hearing Denied and Reply Ignored in Breach of Section 75(4) of the CGST Act appeared first on Tax Unplug.

Technic Infrastructure Private Limited, vs. Revenue [W.P. No. 1298 of 2025]

Background of the Case

The Appellant, Technic Infrastructure Private Limited, engaged in the business of construction and works contract services and registered under the GST regime, was issued an assessment order dated 29.08.2024 under Section 73 of the GST Act, 2017 for the financial year 2019–20. The order was based on discrepancies identified during scrutiny, including mismatches between GSTR-3B and GSTR-1, GSTR-3B and GSTR-2A, GSTR-8 and GSTR-1, as well as alleged non-generation of e-way bills. The final order was passed without properly considering the reply and documentary evidence submitted by the appellant.

Arguments by the Appellant

The appellant contended that the assessment order was passed in violation of the principles of natural justice, as their reply dated 29.06.2024 was not adequately considered and they were not given a reasonable opportunity to present supporting documentation. The appellant further submitted that they were in a position to fully explain the alleged discrepancies if given another opportunity. In support of their claim, they relied on a decision of the Madras High Court in M/s. K. Balakrishnan, Balu Cables vs. Assistant Commissioner of GST & Central Excise, where under similar circumstances, the matter was remanded subject to payment of 25% of the disputed tax. The appellant expressed their willingness to comply with a similar condition for a fresh adjudication.

Respondent’s Response

The respondent, Revenue did not raise strong objection to the appellant’s plea and was agreeable to remanding the matter subject to the appellant making a partial tax deposit. It was submitted that the impugned order was passed due to the appellant’s failure to substantiate their reply with documentary evidence, but the department was open to a fresh assessment if the appellant adhered to conditions ensuring partial recovery of dues.

Court Findings and Decision

The Madras High Court held that the assessment order suffered from procedural irregularities and violated principles of natural justice. The Court set aside the impugned order dated 29.08.2024 and directed the appellant to deposit 25% of the disputed tax within four weeks from the date of receipt of the order. If any part of the tax had already been paid or recovered, the same would be adjusted toward the 25% requirement. Further held that the assessment order would be treated as a show cause notice, and the appellant would be allowed to file objections within four weeks, accompanied by relevant supporting documents. The assessing authority was directed to pass a fresh order after affording a reasonable opportunity of hearing.

To download official order, Click Here

“The site is for information purposes only and does not provide legal advice of any sort. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute an attorney-client relationship. The information on this site is not intended to be a substitute for professional advice.”

The post Madras High Court Sets Aside GST Assessment for Breach of Natural Justice; Allows Fresh Adjudication Subject to Partial Tax Deposit appeared first on Tax Unplug.

Shree Sarkhej Kelwani Mandal vs. Revenue [Special Civil Application No. 6003 of 2021]

Background of the Case

The appellant had filed its return for the Assessment Year 2018-19, declaring nil income while claiming exemption based on its charitable activities. Along with the return, the trust submitted an audit report in Form 10B, as required under Section 12A(b) of the Act. However, due to an inadvertent error by the Chartered Accountant, certain financial figures were incorrectly reported in the audit report. A revised audit report was filed, correcting the discrepancies. Despite this, the Income Tax Department processed the original return under Section 143(1) and issued an intimation order, denying the exemption.

Subsequently, the case was selected for scrutiny assessment, and a notice under Section 143(2) was issued. The appellant responded by explaining the reasons for the revised audit report. However, the Assessing Officer issued a show-cause notice on 27th February 2021, proposing an addition of Rs. 4.75 crore by denying exemption benefits. The appellant sought an adjournment to file a detailed response, requesting time until 11th March 2021. However, the Assessing Officer ignored this request and passed the final assessment order on 4th March 2021, confirming the proposed addition. Aggrieved by this violation of natural justice, the appellant approached the Gujarat High Court.

Arguments by the Appellant

The appellant vehemently argued that the denial of exemption and the hasty passing of the assessment order were arbitrary and illegal. The AO violated principles of natural justice by refusing to grant reasonable time to respond to the SCN. The appellant argued that the revised audit report had already rectified the initial clerical errors, and the Department’s refusal to consider it was contrary to the scheme of the Income Tax Act. It was also submitted that the penalty order passed during the pendency of the High Court’s stay demonstrated willful disregard for judicial authority, amounting to contempt of court.

Furthermore, the appellant also highlighted systemic failures in the Income Tax Department, including defective software that failed to reflect adjournment requests and non-compliance with court orders.

Respondent’s Response

The respondent, Revenue initially defended the assessment order, asserting that the appellant had failed to comply with procedural requirements under the Income Tax Act. It was argued that the revised audit report was filed belatedly, and hence, the denial of exemption was justified.

The Department acknowledged lapses in its handling of the case. It admitted that the Assessing Officer had overlooked the adjournment request due to technical glitches in the e-filing portal, which failed to synchronize the request with the case records. The Department also tendered an unconditional apology for the penalty order passed in violation of the High Court’s stay, stating that it was an unintentional oversight.

Court Findings and Decision

The Gujarat High Court, held that the assessment order was passed in blatant violation of natural justice, as the appellant was denied a reasonable opportunity to present its case. The judges observed that three days’ time to respond to a complex tax demand was grossly inadequate, and the Assessing Officer’s refusal to grant an adjournment was arbitrary. Regarding the penalty order, the court strongly condemned the Department for flouting the interim stay, terming it a serious contempt of judicial authority. The penalty order was quashed outright, and the court directed the Department to ensure strict compliance with judicial orders in the future.

To download official order, Click Here

“The site is for information purposes only and does not provide legal advice of any sort. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute an attorney-client relationship. The information on this site is not intended to be a substitute for professional advice.”

The post Gujarat High Court Quashes Reassessment Order Passed in Blatant Violation of Natural Justice: Assessee Denied Reasonable Opportunity to Present Case appeared first on Tax Unplug.

TPL – HGIEPL Joint Venture vs. Revenue [W.P. (L) No. 15292 of 2022]

Background of the Case

The appellant, TPL-HGIEPL Joint Venture (a consortium of Tata Projects Ltd. and HG Infra Engineering Pvt. Ltd.) filed its return on 27 July 2022, declaring Rs. 6.15 crores as gross receipts below the Rs. 10 crore threshold requiring an audit. The CPC issued a defects notice contending that the appellant’s income exceeded Rs. 10 crores (including Rs. 16.82 crores from “write-back of liabilities”). The Appellant argued that “write-backs” were not operational receipts. Despite submissions, the CPC passed an AI-generated order invalidating the return without reasons, prompting the writ petition.

Arguments by the Appellant

The appellant contended that the impugned order was non-speaking and failed to address the Appellant’s rebuttal, violating the principle that “reasons are the heartbeat of justice”. The AI-driven CPC system lacked human intervention, rendering the order akin to the “inscrutable face of a sphinx”. They further stated that Rs. 16.82 crore write-back (from Note 19 of financial statements) was a non-operational adjustment, not “gross receipts” under Section 44AB. Further, the defects notice provided an opportunity to respond, and the AI’s conclusion was based on pre-programmed rules.

Respondent’s Response

The respondent, Revenue stated that the CPC’s automated system correctly flagged the return since the total declared income (Rs. 16.82 crores) exceeded the Rs. 10 crore threshold. Write-backs constitute “receipts” under Section 44AB, necessitating an audit. The Appellant should have exhausted the statutory remedy under Section 264 (revision by Commissioner) before approaching the High Court.

Court Findings and Decision

The Bombay High Court, held that the non-reasoned, AI-generated order violated principles of fairness. The Court emphasized that automation cannot override constitutional safeguards. Since the CPC’s AI lacks discretion to provide reasons, remanding the case would serve no purpose. Tax Authorities must upgrade AI systems to incorporate reasoned decisions. Taxpayers should first exhaust Section 264 remedies unless exceptional circumstances exist.

The High Court declined to rule on merits but allowed the Appellant to file a revision petition before the Commissioner. The Commissioner must decide within 3 months, ensuring a reasoned order after hearing the Appellant.

Bombay HC Quashes Tax Order

To download official order, Click Here

“The site is for information purposes only and does not provide legal advice of any sort. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute an attorney-client relationship. The information on this site is not intended to be a substitute for professional advice.”

The post Bombay HC Quashes Non-Reasoned Tax Order: AI Can’t Replace Human fairness, Automation Can’t Override Natural Justice appeared first on Tax Unplug.