The High Court clarifies that taxpayers must respond to show-cause notices within the prescribed time. The Income Tax Department is not obligated to reopen the proceedings merely because an assessee submits a reply or requests a personal hearing after the deadline has expired.
Introduction
Timely compliance with notices issued by the Income Tax Department is essential, particularly in faceless assessment proceedings. Ignoring a show-cause notice (SCN) or failing to request an extension within the stipulated period may have serious consequences for taxpayers.
In an important ruling concerning faceless income tax assessments, the Punjab and Haryana High Court has held that the Income Tax Department is not required to entertain a belated reply or personal hearing request after the time specified in the show-cause notice has expired, especially where the assessee neither sought an extension within time nor established sufficient cause for the delay.
The Court emphasised that the obligation of the Assessing Authority is to provide a reasonable opportunity of being heard, not to ensure that the taxpayer actually avails of that opportunity.
The decision highlights the importance of monitoring income tax portal communications and responding to statutory notices within the prescribed deadlines.
Background of the Case
The matter arose from a writ petition filed by Vikas Bansal, who challenged an assessment order passed for Assessment Year 2024-25 by the National Faceless Assessment Centre (NFAC).
The NFAC issued a show-cause notice dated February 24, 2026, requiring the assessee to submit his response by 5:40 PM on March 1, 2026.
However, the assessee neither submitted his reply within the prescribed period nor requested a personal hearing or extension of time.
He subsequently explained that the email notification regarding the show-cause notice had escaped his attention.
After becoming aware of the notice on March 15, 2026, he requested a personal hearing through video conferencing on March 16 and uploaded his response on March 17, 2026.
Meanwhile, the Income Tax Department had already generated the Income and Loss Determination Proposal (ILDP) on March 13, 2026. The final assessment order was digitally authenticated on March 17, 2026.
Aggrieved by the assessment proceedings, the assessee approached the Punjab and Haryana High Court, alleging that the Department had violated the principles of natural justice by failing to consider his reply and personal hearing request.
Legal Issue Before the High Court
The principal question before the Court was whether the Income Tax Department was legally required to consider a taxpayer’s reply or request for personal hearing submitted after the deadline mentioned in the show-cause notice had expired and the assessment proceedings had already progressed to the subsequent stage.
The assessee essentially argued that his belated response and request for a video-conferencing hearing should have been considered before finalising the assessment.
High Court’s Observations and Findings
A Division Bench comprising Justice Deepak Sibal and Justice Sunish Bindlish rejected the assessee’s contention and upheld the Department’s action.
The Court observed that the responsibility of the Assessing Authority is to provide an opportunity to the taxpayer to present his case. However, the authority cannot be expected to ensure that the assessee actually utilises that opportunity within the prescribed timeframe.
The Bench clarified that where an assessee submits a reply, requests a personal hearing or applies for an extension within the period specified in the show-cause notice, the authority is legally bound to consider the request and pass an appropriate reasoned order.
Failure to consider such a timely request could potentially invalidate the assessment proceedings.
However, the legal position changes when the taxpayer allows the prescribed period to expire without responding or seeking an extension and approaches the Department only after the show-cause stage has concluded.
The Court further held that under Section 144B(1), particularly clauses (xiv) and (xv), the Assessing Authority is entitled to prepare the income or loss determination proposal by considering the relevant material available on record and proceed towards completion of the assessment when the assessee fails to respond within the prescribed time.
Once the proceedings have moved beyond the show-cause stage, the authority is not automatically required to reopen that stage merely because a delayed reply or request for video-conferencing hearing is subsequently received.
Why the Assessee’s Explanation Was Rejected
The High Court also examined the assessee’s explanation that he had inadvertently missed the email notification.
The Bench noted that the assessee had actively participated in the assessment proceedings and had even responded to a notice issued under Section 142(1) of the Income Tax Act just one day before the show-cause notice was issued.
In these circumstances, the explanation that the subsequent notice had escaped his attention was not considered sufficient to justify the failure to respond within the prescribed period.
Accordingly, the Court dismissed the writ petition.
However, it clarified that its observations were confined to the challenge concerning the alleged denial of natural justice. The assessee remained entitled to pursue the statutory appellate remedy against the assessment order.
Important Takeaways for Taxpayers and Tax Professionals
This judgment carries significant practical implications for taxpayers, tax consultants and professionals handling faceless income tax assessments.
- Monitor the Income Tax Portal Regularly: Taxpayers should regularly check their income tax e-filing accounts and registered email addresses to avoid missing important statutory communications.
- Respond Within the Prescribed Deadline: Replies to show-cause notices should be filed within the specified time, supported by relevant documents and explanations.
- Seek Extension Before Expiry: If additional time is required, an application for extension should be submitted before the original deadline expires.
- Request Personal Hearing Timely: Where an opportunity for video-conferencing hearing is necessary, the request should be made within the prescribed period.
- Do Not Assume That Belated Replies Will Be Accepted: Once the assessment proceedings have progressed beyond the show-cause stage, the Department may not be obligated to entertain subsequent requests.
Conclusion
The ruling in Vikas Bansal v. National Faceless Assessment Centre reinforces the importance of procedural discipline in faceless income tax assessments.
While the principles of natural justice require the Department to provide a reasonable opportunity of being heard, taxpayers must also act diligently and utilise that opportunity within the prescribed timeframe.
A taxpayer cannot ordinarily claim a violation of natural justice merely because a reply or personal hearing request submitted after the expiry of the stipulated deadline was not considered.
For taxpayers and tax professionals, the message is clear: timely monitoring, prompt responses and properly documented extension requests are essential to safeguarding one’s legal rights during income tax assessment proceedings.
Case Reference:
- Case Title: Vikas Bansal v. National Faceless Assessment Centre
- Court: Punjab and Haryana High Court
- Case Number: CWP No. 11395 of 2026 (O&M)
- Assessment Year: 2024-25
- Relevant Provision: Section 144B of the Income Tax Act, 1961
Disclaimer: This article is intended solely for general legal information and awareness. The applicability of the judgment depends on the facts and circumstances of each case and the relevant statutory provisions.