Court quashes assessment order, emphasizes petitioner's right to explain case, sets aside demand notice.

The High Court quashed the assessment order dated 29th April 2021 and remanded the case for fresh assessment, emphasizing the petitioner's right to explain their case. The court found that respondent no.3 failed to consider the petitioner's timely reply before issuing the assessment order, leading to inaccuracies. Consequently, the demand notice under Section 156 of the Income Tax Act, 1961 was also set aside. The court directed a de novo consideration without preconceived notions and criticized the Income Tax Officer's affidavit for discrepancies. A directive was issued to circulate the judgment to ensure truthful conduct by tax department officers nationwide.

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Issues:
1. Quashing of assessment order dated 29th April 2021 and remand for fresh assessment.
2. Allegations of respondent no.3 not considering petitioner's reply before passing the assessment order.
3. Quashing of demand notice under Section 156 of the Income Tax Act, 1961.
4. Remand for de novo consideration without making observations on the merits.
5. Criticism of the affidavit filed by Income Tax Officer regarding petitioner's response to the show cause notice.
6. Directive to circulate the order to ensure truthful conduct by tax department officers.

Analysis:
1. The petitioner sought the quashing of the assessment order dated 29th April 2021 and requested a remand for fresh assessment, emphasizing the need for a proper opportunity to explain their case personally. The High Court accepted the plea, setting aside the assessment order and remanding the matter for fresh assessment on merits.

2. The judgment highlighted that respondent no.3's assessment order was prejudicial to the petitioner as it inaccurately stated that the petitioner did not respond to the show cause notice. Evidence presented in the form of a reply to the notice and an e-proceedings acknowledgment confirmed the timely submission of documents by the petitioner. The court concluded that respondent no.3 erred in not considering the petitioner's reply before issuing the assessment order.

3. In line with the quashing of the assessment order, the demand notice issued under Section 156 of the Income Tax Act, 1961 was also set aside. The court clarified that no further consequential notice would be necessary following the annulment of the assessment order and demand notice.

4. The matter was remanded for de novo consideration by the concerned authority, with a directive to make a decision in accordance with the law. The court explicitly stated that no observations were made on the merits of the case, leaving the assessment to be conducted afresh without preconceived notions.

5. The judgment criticized the affidavit filed by the Income Tax Officer, noting discrepancies between the officer's assertions and the evidence provided by the petitioner. The court highlighted the importance of truthfulness and diligence in official filings, pointing out the need for officers to acknowledge mistakes rather than presenting misleading information in affidavits.

6. As a final directive, the court ordered the circulation of the judgment to the Commissioner of Income Tax (Judicial), Mumbai, and all Commissioners (Judicial) nationwide. This step aimed to raise awareness within the tax department regarding the significance of honesty and accountability in their conduct, emphasizing the importance of accepting errors rather than resorting to misleading practices.

In conclusion, the High Court's judgment addressed various issues related to the assessment order, respondent's conduct, and the need for truthful practices within the tax department, ultimately leading to the quashing of the assessment order, remand for fresh assessment, and a directive for transparent conduct moving forward.

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