Assessment Order Under Income Tax Act 1961 for AY 2017-2018 Set Aside

The Court set aside the assessment order under the Income Tax Act, 1961 for AY 2017-2018, due to a procedural flaw of not considering objections before passing the order. The increased tax demand and penalty proceedings were annulled, and a fresh notice was directed to be issued to the petitioner for a fair consideration of objections, ensuring principles of natural justice were upheld.

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Issues:
1. Challenge to assessment order under Income Tax Act, 1961 for AY 2017-2018.
2. Setting aside of notice of demand and penalty proceedings.
3. Breach of principles of natural justice.
4. Enhanced imposition of tax demand and initiation of penalty proceedings.
5. Consideration of objections before passing assessment order.

Analysis:
1. The writ petition challenged the assessment order dated 22.04.2021 under Section 143(3) read with Section 144B of the Income Tax Act, 1961 for AY 2017-2018. The petitioner sought setting aside of the notice of demand and initiation of penalty proceedings issued on the same date.

2. The petitioner alleged a breach of natural justice as the objections filed on 22.04.2021 were not considered before passing the assessment order. The impugned assessment order resulted in an increased tax demand of approximately Rs. 15.62 crores and initiated penalty proceedings, pegging the taxable income at around Rs. 19.19 crores.

3. Ms. Malhotra contended that the petitioner could not assume the extension of time to respond to the show cause notice due to the absence of a formal response to the adjournment request. However, the Court noted that the assessment order was passed before the objections were filed, indicating a procedural flaw.

4. Considering the procedural irregularity, the Court set aside the impugned assessment order and directed respondent no. 1 to issue a fresh notice to the petitioner via email. The petitioner's authorized representative was granted a personal hearing before the fresh assessment order was passed. It was emphasized that respondent no. 1 must consider the objections filed on 22.04.2021 regarding the show cause notice dated 19.04.2021 before proceeding with the fresh assessment order.

5. In conclusion, the writ petition was disposed of with the direction to set aside the impugned assessment order and ensure a fair consideration of the objections raised by the petitioner. The Court's decision aimed to uphold the principles of natural justice and provide an opportunity for the petitioner to present their case effectively.

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