ITAT Delhi: Portal Lockouts and 24-Hour Deadlines Breach Principles of Natural Justice

In a significant ruling concerning the procedural fairness of the Faceless Assessment Scheme, the Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has reinforced the supremacy of the principles of natural justice over technical limitations. In the case of Mrs. Guneet Kaur Chadha Vs. ITO, the Tribunal set aside an assessment order passed ex-parte, citing that the assessee was denied a reasonable opportunity to be heard due to portal blockages and impossibly short compliance timelines.

This judgment serves as a critical precedent for cases where technical glitches on the Income Tax portal or insufficient time frames prevent an assessee from mounting a proper legal defense.

Case Background and Core Dispute

The legal controversy arose from the assessment proceedings for the Assessment Year 2020-21. The assessee, an individual, had filed her return of income on December 27, 2020, declaring a total income of Rs. 23,52,980.

During the scrutiny proceedings, the Assessing Officer (AO) flagged a specific issue regarding a deduction claimed by the assessee. The AO proposed a significant disallowance amounting to Rs. 55,00,216 under Section 57(iii) of the Income Tax Act 1961.

The primary grievance of the assessee was not merely the addition itself, but the procedural manner in which the Revenue authorities conducted the assessment, specifically regarding the denial of adequate time to respond and technical barriers preventing the submission of evidence.

The Procedural Irregularities

The Tribunal noted several glaring procedural lapses that prejudiced the assessee’s rights: