2022 (1) TMI 897 - HC - Income Tax

Validity of order passed under Section 143(3) read with Section 144-B - denial of natural justice - principal ground of challenge as raised to the assessment order is based on the breach and non-compliance of the principles of natural justice inasmuch as there was no proper and sufficient opportunity granted to the petitioner to respond to the show cause notice issued in that regard by the respondent no.1 -.HELD THAT - Despite the petitioner responding to the show cause notice much prior to issuance of the assessment order, there is no consideration of the reply given by the petitioner to the show cause notice. A mere statement now in the affidavit in reply that the petitioner s response to the show cause notice did not contain any new or material fact cannot be accepted as such reason/consideration is not found in the impugned assessment order. The validity of the impugned assessment order would have to be judged from its contents and the same cannot be supported by extraneous material in the form of affidavit in reply. Hence for this reason the challenge to the assessment order dated 14.05.2021 is liable to succeed. An alternate remedy by way of statutory appeal is available to the petitioner. However in view of the fact that it is apparent that the assessment order has been issued without granting due and proper opportunity to the petitioner, we are not inclined to relegate the petitioner to avail that statutory remedy. We may also state that the petitioner has challenged the provisions of Section 144-B(7)(viii) and (xii) and provisions of Section 144-B(1)(xvi)(b) and (c) of the said Act as being violative of Article 14 of the Constitution of India. Since we are not required to enter into the merits of the assessment order, such challenge is kept open for being raised at an appropriate stage, if so advised. The assessment order dated 14.05.2021 passed by the respondent no.1 is set aside. The proceedings are remanded to the respondent no.1 for a fresh consideration in accordance with law after giving due opportunity of hearing to the petitioner.

Summary

Issues: Challenge to assessment order under E-Assessment Scheme-2019 based on breach of natural justice principles.

Detailed Analysis:
1. Issue: Challenge to assessment order under E-Assessment Scheme-2019.
- Analysis: The writ petition filed under Article 226 of the Constitution of India challenges the assessment order dated 14.05.2021 passed under Section 143(3) read with Section 144-B of the Income Tax Act, 1961. The petitioner alleges a breach of natural justice principles in the assessment process.

2. Issue: Breach and non-compliance of principles of natural justice.
- Analysis: The petitioner argues that there was a lack of proper and sufficient opportunity granted to respond to the show cause notice issued by respondent no.1. Despite the petitioner's request for an adjournment on medical grounds and submission of a detailed reply on 21.04.2021, the assessment order issued on 14.05.2021 did not consider the petitioner's response, leading to a denial of a fair opportunity.

3. Issue: Respondent's stance and legal arguments.
- Analysis: The respondent no.3 contends that the assessment order was passed after considering all material on record and that no new facts were presented by the petitioner in the reply dated 21.04.2021. It is argued that due opportunity was provided, and the petitioner had the option of statutory appeal under Section 264 of the Income Tax Act, 1961.

4. Issue: Judicial findings and decision.
- Analysis: The High Court found that the assessment order was passed without granting a proper opportunity to the petitioner to respond to the show cause notice. Despite the petitioner filing a reply before the assessment order was issued, the respondent did not consider it. The Court held that the assessment order lacked proper consideration of the petitioner's response, leading to a violation of natural justice principles.

5. Issue: Remedy and future course of action.
- Analysis: The Court set aside the assessment order dated 14.05.2021 and remanded the proceedings to respondent no.1 for a fresh consideration in accordance with the law, ensuring a proper opportunity for the petitioner to be heard. The petitioner was not required to pursue the statutory appeal given the procedural irregularities. The challenge to certain provisions of the Income Tax Act was kept open for future consideration.

This detailed analysis highlights the key legal issues, arguments presented, judicial findings, and the subsequent remedy provided by the High Court in response to the challenge to the assessment order based on the breach of natural justice principles.