HC dismisses taxpayer’s claim for minimum seven working days to respond to pre-notice inquiry for reassessment

In the case of Abhishek Bansal^[1] (Taxpayer), a resident in India, the Delhi High Court (HC) examined the validity of a pre-notice inquiry, pre-notice order and the consequent reassessment notice, on a challenge by the Taxpayer that he was not granted with sufficient time to respond to pre-notice inquiry.

The Taxpayer had filed a return of income for tax year 2019-20, claiming deductions for purchases made from a resident sole proprietor. On 12 March 2024, the tax authority issued a pre-notice inquiry, granting the Taxpayer seven days’ time to respond with objections, if any. The notice alleged income escapement, contending that the sole proprietor vendor was merely an accommodating party and that the purchases made from it were non-genuine transactions. The Taxpayer submitted a response on 29 March 2024, along with the supporting documents to substantiate the claim of the purchases. After considering the response, the tax authority passed a pre-notice order along with reassessment notice issued on 30 March 2024, concluding that the case was a fit case for reopening.

The Taxpayer filed a writ petition before the Delhi HC, challenging the proceedings, inter alia, on the ground that out of the seven days provided in the pre- notice inquiry, three were public holidays, and hence, effectively the Taxpayer did not get seven working days to respond to the said notice.

The Delhi HC held that the Taxpayer's contention was an afterthought. The HC reasoned that the Taxpayer responded to pre-notice inquiry within the stipulated period and did not request an extension for filing the response. Further, the HC held that the statutory provisions do not mandate tax authority to grant a minimum of seven working days for the Taxpayer to respond to a pre-notice inquiry. Even if public holidays are excluded from the calculation, the Taxpayer was required to submit the response on the next working day post the holidays. Accordingly, the HC dismissed the petition and upheld the validity of pre-notice inquiry and order.

[1][TS-969-HC-2024(DEL)] W.P.(C) 17300/2024