Assessment Order Overturned for Procedural Errors; Case Remitted for Proper Review Under IT Act, Section 144B(1)(xvi.

The HC set aside the impugned Assessment Order due to procedural irregularities, specifically the failure to issue a Draft Assessment Order as mandated by Section 144B(1)(xvi) of the IT Act. The case was remitted to the respondents for proper assessment. The petitioner was instructed to upload pending information within thirty days, and the belated return was allowed for consideration. The Writ Petition was disposed of without costs, and related miscellaneous petitions were closed.

---

---

Issues involved:
The challenge to the impugned Assessment Order based on violation of principles of natural justice and failure to pass a Draft Assessment Order as per Section 144B(1)(xvi) of the Income Tax Act, 1961.

Details of the Judgment:

Violation of Principles of Natural Justice:
The petitioner contested the Assessment Order, arguing that there was a breach of natural justice principles and failure to issue a Draft Assessment Order as required by Section 144B(1)(xvi) of the IT Act. The petitioner had initially engaged with the jurisdictional Assessment Officer, but the case was later transferred to the first respondent under the E-Assessment Scheme, 2019 and Section 144B of the IT Act. Despite providing a response to a notice under Section 142(1) of the IT Act on 04.08.2021, the petitioner's input was allegedly disregarded in the final Assessment Order.

Combining Draft Assessment Order and Show Cause Notice:
The respondents argued that they had followed the necessary procedures, including issuing a Show Cause Notice under Section 144 of the IT Act on 31.08.2021. However, the court noted that the Department had improperly combined the Show Cause Notice with the Draft Assessment Order, which is not permissible under the provisions of the IT Act. The court emphasized the structured nature of the assessment process under Section 144B of the IT Act, which mandates specific stages of assessment and the passing of a Draft Assessment Order.

Setting Aside the Assessment Order:
In light of the procedural irregularities and the failure to adhere to the statutory requirements, the court set aside the impugned Assessment Order. The case was remitted back to the respondents with a directive to refer the matter to the Assessment Unit for the proper passing of a Draft Assessment Order within three months. The petitioner was instructed to upload any outstanding information within thirty days, and provisions were to be made by the respondents to facilitate this upload. Additionally, the belatedly filed return by the petitioner was permitted to be uploaded, with a clarification that the issue would be independently decided based on current procedures.

Disposition of the Writ Petition:
The court disposed of the Writ Petition with the above observations, emphasizing that no costs were to be incurred. Connected Writ Miscellaneous Petitions were closed as well, concluding the legal proceedings in this matter.

---