Court Invalidates Assessment Order for Breach of Natural Justice, Orders Refund and Fresh Assessment

The court found that the assessment order violated principles of natural justice by not providing the petitioner with necessary information, rendering it ex parte. Despite the availability of an alternative remedy, the court deemed the petition maintainable under Article 226 due to the breach of natural justice. The assessment order and subsequent recovery actions were deemed invalid, leading to the direction for the respondent to lift the bank attachment and refund the appropriated amount. The Assessing Officer was granted twelve months from the court's order receipt to pass a fresh assessment.

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Issues Involved:
1. Violation of principles of natural justice in the assessment order.
2. Maintainability of the petition under Article 226 despite the availability of an alternative remedy.
3. Validity of the assessment order and subsequent recovery actions.
4. Limitation period for passing a fresh assessment order upon remand.

Detailed Analysis:

1. Violation of Principles of Natural Justice:
The petitioners argued that the impugned assessment order dated 30.12.2019 was passed without providing an opportunity of hearing and without considering the replies and documents submitted online. The court found that the respondent did not provide the petitioner with the information in possession of the Assessing Officer, which was the basis for making additions. This omission constituted a breach of the principles of natural justice, rendering the assessment order ex parte and in the nature of a best judgment assessment under Section 144 of the Income Tax Act, 1961, despite being passed under Section 143(3), which requires an opportunity for the assessee to rebut proposed additions.

2. Maintainability of the Petition Under Article 226:
The respondent contended that the petition was not maintainable due to the availability of an alternative remedy under the Income Tax Act. However, the court referred to the Supreme Court's decision in Whirlpool Corporation v. Registrar of Trade Marks, which established that a writ petition is maintainable in cases of violation of fundamental rights, principles of natural justice, or lack of jurisdiction. Given the breach of natural justice in this case, the court held that the petition was maintainable under Article 226.

3. Validity of the Assessment Order and Subsequent Recovery Actions:
The court determined that the impugned assessment order was invalid due to the violation of principles of natural justice. Consequently, the subsequent recovery actions, including the bank attachment notices and the recovery of Rs. 15,50,657.60 from the petitioners' bank account, were also invalid. The court directed the respondent to lift the attachment on the bank account and refund the appropriated amount.

4. Limitation Period for Passing a Fresh Assessment Order Upon Remand:
A significant issue was whether the Assessing Officer could pass a fresh assessment order within the limitation period prescribed under Section 153 of the Income Tax Act. The court referred to Section 153(6)(i), which allows the Assessing Officer to complete the assessment within twelve months from the end of the month in which the court's order is received. The court also cited relevant case law, including the Supreme Court's decision in The Director of Inspection of Income Tax (Investigation) v. M/s. Pooran Mal & Sons, which supported the view that the limitation period is extended upon remand by the court. The court concluded that the Assessing Officer would have twelve months from the receipt of the court's order to pass a fresh assessment.

Conclusion:
The court quashed the impugned assessment order and remanded the matter back to the Assessing Officer to pass a fresh de novo assessment order within twelve months from the end of the month in which the court's order is received. The court also directed the respondent to lift the bank attachment and refund the appropriated amount. The petition was allowed, and the rule was made absolute to the extent specified.

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