2022 (4) TMI 293 - HC - Income Tax

Validity u/s 144B - AO did not consider the reply filed by the assessee - HELD THAT - AO remained under an erroneous impression that the writ applicant - assessee has not filed his reply to the show cause notice. There is a detailed reply filed by the writ applicant asseessee, which is on record. The aforesaid is suggestive of the fact that the Assessing Officer failed to consider the reply filed by the assessee and proceeded to pass the impugned assessment order. We are inclined to quash and set aside the impugned assessment order and remit the matter to the Assessing Officer for a fresh consideration. While considering the matter afresh, the Assessing Officer shall take into consideration the reply, which has been filed by the assessee. The assessee shall also be heard before passing the final assessment order. We clarify that we have even otherwise not expressed any opinion on merits of the case. We have thought fit to interfere only on the ground that the case is one of violation of the principles of natural justice.

Summary

Issues:
Challenge to assessment order under Section 143(3) read with Section 144B of the Income Tax Act, 1961 for A.Y. 2018-19 without considering reply and request for personal hearing.

Analysis:
The writ applicant sought relief through a writ application under Article 226 of the Constitution of India, challenging the assessment order passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961 for A.Y. 2018-19. The applicant raised concerns regarding a significant addition made without considering submissions and requests for personal hearing. The applicant prayed for various reliefs, including quashing the assessment order, staying the demand amount, and seeking interim relief deemed fit by the Court. The Court heard both parties, and it was noted that the case would be disposed of on a short ground without delving much into the facts.

The Court highlighted that a show cause notice and draft assessment order were issued to the applicant for faceless assessment under Section 144B of the Act, with a deadline for reply by a specified date. The applicant did file a reply to the show cause notice, as acknowledged by the Revenue in its affidavit-in-reply. However, the Assessing Officer erroneously stated in the assessment order that there was no response from the applicant, indicating a failure to consider the filed reply. This led the Court to conclude that natural justice principles were violated, necessitating the quashing and setting aside of the assessment order.

Based on the grounds of the Assessing Officer's failure to consider the applicant's reply and the violation of natural justice principles, the Court allowed the writ application, quashed the assessment order, and remitted the matter back to the Assessing Officer for a fresh consideration. The Court emphasized that the Assessing Officer should take into account the applicant's reply and provide an opportunity for the applicant to be heard before passing a final assessment order. The Court refrained from expressing any opinion on the merits of the case, focusing solely on the procedural irregularities observed.

In conclusion, the Court granted the writ application, setting aside the assessment order and directing a fresh consideration by the Assessing Officer within two months. The Court permitted direct service and emphasized the importance of upholding principles of natural justice in such proceedings.