Assessment order set aside due to lack of natural justice, petitioner to be given fair hearing.

The High Court held that the assessment order and notice of demand issued under the Income Tax Act for the assessment year 2018-19 were in violation of natural justice principles as the petitioner was not given an opportunity to respond to proposed additions. Relying on judgments from other High Courts, the Court set aside the impugned order, allowing the petition. The respondents were directed to provide the petitioner with a fair opportunity to be heard in response to the show cause notice. The Court emphasized the importance of upholding natural justice in assessment proceedings.

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Issues:
Challenge to assessment order and notice of demand under Income Tax Act for assessment year 2018-19.

Analysis:
The petitioner challenged the assessment order and consequential notice of demand issued under Section 156 of the Income Tax Act for the assessment year 2018-19. The petitioner filed its return of income, which was processed under Section 143(1)(a) of the Act. Subsequently, the case was selected for complete scrutiny through CASS, citing reasons related to deductions claimed for industrial undertakings. The petitioner responded to the notices issued by the respondents under Section 142(1) by submitting detailed replies. An assessment order proposing additions to the income was passed by the respondent, and a show cause notice was issued to the petitioner. The petitioner requested an adjournment to file a detailed reply, but the respondent passed the impugned order without accepting or rejecting the request, leading to the filing of the instant petition.

The High Court observed that the impugned assessment order was made in violation of the principles of natural justice and fair play as the petitioner was not given an opportunity to respond to the proposed additions or to be heard in the matter. Citing judgments from the Delhi High Court and the Bombay High Court, the Court emphasized the importance of affording a fair opportunity to the petitioner. Consequently, the Court held that the impugned order could not be sustained. The petition was allowed, and the assessment order along with the consequential notice of demand and notice for initiating penalty were set aside. However, the respondents were granted liberty to take steps in accordance with the law by providing an opportunity for the petitioner to be heard in response to the show cause notice.

In conclusion, the High Court disposed of the instant petition and any pending applications, emphasizing the importance of adhering to principles of natural justice and fair play in assessment proceedings under the Income Tax Act.

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