Court invalidates assessment order for non-compliance with tax law, orders fresh assessment with taxpayer's participation.

The Court set aside the assessment order for AY 2017-18 due to non-compliance with Section 144B of the Income Tax Act, 1961, which mandates the communication of a draft assessment order and show-cause notice to the taxpayer. All consequential notices/orders were also annulled. The Department was permitted to conduct a fresh assessment, with the condition that the taxpayer be granted a personal hearing. Cooperation and provision of necessary documents were required from the taxpayer for the new assessment. The importance of procedural compliance and ensuring a fair opportunity for the taxpayer to participate in the assessment process was emphasized.

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Issues: Challenge to assessment order under Section 143 (3) read with Section 144B of the Income Tax Act, 1961 for AY 2017-18.

Analysis:
1. The petitioner challenged an assessment order dated 8th September, 2021, passed by the National Faceless Assessment Centre, Delhi, for the Assessment Year 2017-18. The main contention raised was the non-compliance with the mandatory requirement under Section 144B of the Income Tax Act, 1961, which necessitates the communication of a draft assessment order and a show-cause notice to the petitioner before the final assessment order is passed.

2. The petitioner's counsel referred to judgments of the Delhi High Court and the Orissa High Court in similar cases, emphasizing the importance of complying with the procedural requirements outlined in Section 144B of the Act. It was pointed out that in the present case, the impugned assessment order was issued without providing the petitioner with a draft assessment order as mandated by law.

3. Based on the legal precedents cited and the clear violation of the procedural requirement under Section 144B, the Court set aside the impugned assessment order and all consequential notices/orders. However, the Department was granted liberty to conduct a fresh assessment for the AY 2017-18, provided that the petitioner is given a personal hearing in advance. The petitioner was instructed to cooperate and provide all necessary documents and information for the fresh assessment proceedings.

4. The writ petition was disposed of with the above directions, highlighting the importance of adhering to procedural requirements and ensuring a fair opportunity for the petitioner to present their case during the assessment process.

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