Court quashes assessment order for lack of fair opportunity

The High Court allowed the writ petition challenging the assessment order under the Income Tax Act for the assessment year 2007-08. The court found that the petitioner was not provided with a fair opportunity to respond to allegations based on a third party's statement, leading to the assessment being deemed unsustainable. The court quashed the order and directed a fresh consideration by the respondent, emphasizing the importance of affording the petitioner a fair and reasonable opportunity for a hearing.

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Issues:
1. Challenge to assessment order passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961 for the assessment year 2007-08.
2. Request for copy of sworn statement made by third party, Mukesh Choksi, forming the basis for re-opening assessment.
3. Lack of opportunity for petitioner to respond to allegations based on the sworn statement.
4. Comparison with a similar case where the High Court held absence of fair opportunity renders assessment order unsustainable.

Analysis:
1. The petitioner challenged the assessment order dated 30.06.2014 passed by the Income Tax Officer under Section 143(3) read with Section 147 of the Income Tax Act, 1961 for the assessment year 2007-08. The order added a sum of Rs.6,34,705 to the petitioner's income, allegedly pertaining to shares purchased using income that had escaped assessment. The petitioner contended that the assessment was based on a statement made by Mukesh Choksi, a third party, without providing a copy of the statement or specific allegations against the petitioner.

2. The petitioner requested a copy of the sworn statement made by Mukesh Choksi, upon which the assessment proceedings were re-opened. Despite objections raised by the petitioner regarding the lack of details and specific allegations against him in the statement, the respondent proceeded with the assessment. The petitioner argued that without being informed of the basis for the transaction with Mukesh Choksi, he was denied a fair opportunity to respond to the allegations.

3. The petitioner's counsel highlighted a judgment from the Delhi High Court where a similar situation arose, and the court held that the absence of a fair and reasonable opportunity for the assessee to respond rendered the assessment order unsustainable under Article 226 of the Constitution of India. The court emphasized the importance of providing the assessee with relevant details and copies of statements forming the basis of the assessment.

4. Considering the lack of opportunity for the petitioner to respond to the allegations based on the statement of Mukesh Choksi and the failure to provide necessary details, the High Court held that the assessment order was passed without affording a fair hearing to the petitioner. Consequently, the court allowed the writ petition, quashed the impugned order, and remitted the matter for fresh consideration by the respondent, emphasizing the need for a fair and reasonable opportunity of hearing for the petitioner.

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