Bombay High Court
Bharat Karsandas ThakkarversusThe National Faceless Assessment Centre
- Decided
- Disposal
- DISPOSED OFF
Holding
The Assessment Order, notice of demand and penalty show‑cause notices are quashed for violating natural justice and the SOPs, and the matter is remanded for fresh proceedings with adequate time for reply and hearing.
Summary
The Bombay High Court quashed the Income Tax Assessment Order dated 26 March 2026, along with the notice of demand and penalty show‑cause notices, on the ground that the Assessing Officer violated principles of natural justice and the Standard Operating Procedures of the National Faceless Assessment Centre. The petitioner was given only one working day to reply to a show‑cause notice issued on a Friday evening and was scheduled for a personal hearing the next day with less than 24 hours’ notice, contrary to the SOPs which require at least seven working days for a reply and reasonable notice for a hearing. The court also held that the petitioner’s request for a one‑day adjournment of the hearing was unreasonably denied. Consequently, the court ordered the assessment proceedings to be reopened, directing the Assessing Officer to provide a minimum of seven working days to file a reply and at least three working days’ notice for a video‑conference hearing. All other issues, including the challenge to a Section 148 notice, were left open for future proceedings.
Issues considered
- Whether the Assessment Order and related notices were passed in violation of the principles of natural justice
- Whether the time granted to file a reply to the Show Cause Notice complied with the SOPs requiring a minimum of seven working days
- Whether the notice for personal hearing provided sufficient time and complied with procedural requirements
- Whether the refusal to grant an adjournment of the personal hearing was justified
Legislation cited
- Income Tax Act, 1961 — s. 144B, 147, 147A, 148, 156, 292BC, 56, 68
Subjects
- natural justice
- assessment order
- income tax
- show cause notice
- procedural fairness
- Standard Operating Procedures
- personal hearing
- adjournment
- quashing
- High Court
Judgment
3-WP-2408-2026.doc
Bharat Thakkar Vs. The NFAC
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 2048 OF 2026
Bharat Karsanas Thakkar ...Petitioner
V/s.
The National Assessment Centre & Ors. ...Respondents
_______________________________________
Mr. Dharan V. Gandhi, for the Petitioner.
Mr. N. C. Mohanty, for the Respondents.
_______________________________________
CORAM : B. P. COLABAWALLA AND
FARHAN P. DUBASH, JJ.
DATE : 11th SEPTEMBER 2026
P. C.:
1. Rule. Rule made returnable forthwith. With the consent of the parties, the
present petition is taken up for final disposal.
2. At the outset, Mr. Mohanty learned Counsel for the Respondents, tenders an
Affidavit-in-Reply dated 6th August 2026 by one Mr. Sanjay Kumar, Income
Tax Officer, Ward 2(1)(1), Mumbai. The same is taken on record.
3. The present Petition challenges, inter alia, the Assessment Order passed
under Section 144B read with Section 147 of the Income Tax Act, 1961 (“the
Act”) dated 26th March 2026, the notice of demand under Section 156 of the
Act dated 26th March 2026, and the Show Cause Notices for levy of penalty
all dated 26th March 2026, for Assessment Year 2021-22, whereby the total
AMOL
PREMNATH income of the Petitioner was assessed at Rs. 26,83,88,328/- and a demand of
JADHAV
Digitally signed by
AMOL PREMNATH
JADHAV
Date: 2026.09.21 Page 1 of 6
13:48:51 +0530
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Bharat Thakkar Vs. The NFAC
Rs. 34,13,91,100/- was raised.
4. In this Petition, the Petitioner has also challenged the validity of the notice
under Section 148 of the Act dated 29 th March 2025 as well as the
constitutional validity of the provisions of Section 147A and Section 292BC
of the Act. However, learned Counsel for the Petitioner, on instructions,
states that at present he wants to press his challenge against the Assessment
Order and the consequential notice of demand and Show Cause Notices for
levy of penalty. He submitted that all other issues may be kept open to be
agitated in appropriate proceedings should the need arise.
5. The short ground on which the challenge has been laid to the Assessment
Order and the consequential notices is that the same have been passed in
gross violation of the principles of natural justice and in violation of the
provisions of Section 144B of the Act read with the Standard Operating
Procedures (“SOPs”) issued by the NFAC. From the records, it can be seen
that the Petitioner was issued a Show Cause Notice on 20 th March 2026,
which was a Friday. Such notice was undisputedly signed and issued at 7:51
PM. This notice granted the Assessee time to reply by 23 rd March 2026, i.e.,
Monday by 4:00 PM. In the Show Cause Notice, additions were proposed to
the extent of Rs. 26,81,38,328/- comprising of disallowance of business
expenses of Rs. 37,08,100/-, capital gains addition of Rs. 14,78,451/-,
addition of Rs. 1,05,32,758/- under Section 56 towards interest from Hatgad
Resorts Pvt. Ltd., and additions of Rs. 24,39,19,019/- and Rs. 85,00,000/-
under Section 68 towards unexplained credits from M/s Swas Construction
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Bharat Thakkar Vs. The NFAC
Co. and M/s Terra Firma Trading LLP respectively.
6. In response to this notice, a personal hearing was sought. The personal
hearing notice was issued on 22nd March 2026, which is a Sunday,
undisputedly signed at 9:27 PM, and which directed the Assessee to appear
for a personal hearing on the next day, i.e. 23 rd of March 2026 at 12:10 PM.
In response to such notice, the Petitioner had sought an adjournment
requesting one day’s time to appear. Such request was not acceded to. As a
result, the Petitioner’s representative was compelled to appear at the
scheduled time of personal hearing. In the personal hearing, as pleaded in
paragraph 3.21 of the Petition, the representative for the Petitioner sought a
day’s time to file a Reply to the Show Cause Notice and for a personal
hearing. However, the same was refused. Further, in paragraph 3.22 of the
Petition, it has been pleaded that the Petitioner tried to upload the Reply by
4:30 PM on 23rd March 2026. However, by such time the portal was closed
for filing of Reply. Ultimately, an Assessment Order has been passed on 26 th
March 2026. In paragraph 4.5 of the Assessment Order [which is at page 470
of the Petition], it has been mentioned that despite sufficient opportunities,
the Assessee did not submit any written reply to Show Cause Notice.
Consequently, various additions have been made.
7. None of the above facts have been disputed in the Affidavit-in-Reply filed by
the Respondents. However, what has been stated in the Reply is that the
Petitioner appeared on video conference and made submissions which have
been considered.
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Bharat Thakkar Vs. The NFAC
8. After perusing the record and hearing the parties, we find that the
Assessment Order has been passed in gross violation of the principles of
natural justice for the following reasons:
a) Firstly, admittedly the Show Cause Notice was issued on 20 th March
2026, which is a Friday, late in the evening. The Petitioner was granted
time to Reply by 23rd March 2026, i.e. a Monday, by around 4:00 PM.
Effectively, only one working day’s time was given to the Petitioner to
file their Reply. This is in contravention of the SOPs laid down by the
National Faceless Assessment Centre which requires a minimum of 7
working days time to file the Reply. In any event, one working day’s
time to file the Reply is clearly insufficient. Further, the request of the
Petitioner to grant one more day’s time to file Reply was rejected. This
is also not justifiable.
b) The notice for personal hearing was issued on 22 nd of March 2026 late
in the evening at about 9:30 PM requiring the Petitioner to appear the
next day afternoon at about 12:10 PM. This again grants insufficient
time for the Petitioner to appear for the personal hearing i.e., not even
24 hours. Moreover, the Show Cause Notice itself provides that prior
to a personal hearing being granted, the Assessee is given an
opportunity to reply to the Show Cause Notice. In the present case, a
personal hearing was scheduled before the time to file the Reply had
expired. This is again not tenable.
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Bharat Thakkar Vs. The NFAC
c) The Petitioner’s request to adjourn the personal hearing by one day
was not accepted. The request of adjournment was, in our view, very
reasonable and not acceding to such request was wholly unjustified.
9. From what is narrated above, it is clear that the Assessment Order has been
passed without granting the Petitioner sufficient opportunity of being heard
inasmuch as insufficient time was given to the Petitioner to file its Reply and
to appear for a personal hearing. Further, a reasonable request for
adjournment for even one day was not accepted. In light of the above, we are
of the clear opinion that the present matter requires interference, and we
accordingly do so. The impugned Assessment Order dated 26 th March 2026,
the notice of demand dated 26th March 2026, and the Show Cause Notices
for levy of penalty of the same date, are all hereby quashed and set aside.
10. We now remand the matter to the file of the Assessing Officer to commence
the proceedings from the stage of the Show Cause Notice. He shall reopen
the proceeding on the portal and issue an intimation to the Petitioner to file
his Reply to the Show Cause Notice. A minimum period of 7 working days
should be given to the Petitioner to file his Reply to the Show Cause Notice.
Further, the Petitioner shall be afforded an opportunity of being heard
personally through video conferencing, a notice whereof shall be served at
least 3 working days in advance. If the Assessing Officer wants to rely upon
any decisions or any other material, he shall provide a copy thereof to the
Petitioner and grant him an opportunity to deal with the same before passing
of the Assessment Order. The Assessment Order so passed shall be a
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Bharat Thakkar Vs. The NFAC
speaking order dealing with all the contentions raised by the Petitioner. The
above process of completion of assessment should be done within a period of
12 weeks from the date of uploading of this order on the High Court website.
11. All other contentions raised in the Petition including challenge to the validity
of the notice issued under Section 148 of the Act are expressly kept open for
the parties to agitate in appropriate appellate proceedings, if the need so
arises.
12. Rule is made absolute in the aforesaid terms and the Writ Petition is also
disposed of in terms thereof. However, there shall be no order as to costs.
13. This order will be digitally signed by the Private Secretary / Personal
Assistant of this Court. All concerned will act on production by fax or email
of a digitally signed copy of this order.
( FARHAN P. DUBASH, J. ) ( B. P. COLABAWALLA, J. )
Amol
Page 6 of 6
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Order dated 11th September 2026
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