High Court quashes assessment order for 1995-96, citing lack of natural justice. Remand for proper procedure.

The High Court set aside the assessment order, notice of demand, and penalty notices for Assessment Year 1995-96 due to the violation of principles of natural justice. The matter was remanded to the Assessing Officer with directions to provide a personal hearing via Video Conferencing after serving a copy of the draft Assessment Order, followed by a reasoned order in compliance with the law.

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Issues:
Challenge to assessment order under Income Tax Act for Assessment Year 1995-96, violation of principles of natural justice, necessity of prior show cause notice and draft Assessment Order, interpretation of Section 144B(7) of the Act, requirement of personal hearing, impact of failure to grant personal hearing, remand of the matter to Assessing Officer.

Detailed Analysis:

The High Court heard a writ petition challenging an assessment order dated 13th May, 2021 under Section 144 read with Section 254 of the Income Tax Act for the Assessment Year 1995-96. The petitioner contended that the order and accompanying notices were illegal, issued without due consideration, and against the principles of natural justice. The petitioner emphasized the lack of prior notice, draft Assessment Order, and opportunity for a hearing, citing the impact of Covid-19 on their Chartered Accountant's family, which hindered their response filing.

The Court noted that Section 144B(7) of the Act mandates a prior show cause notice and draft Assessment Order before issuing the final Assessment Order, with provision for a personal hearing upon request by the assessee. Referring to a previous judgment, the Court highlighted the obligation on the Revenue to consider requests for personal hearings and the absence of established procedures for such requests. The Court found the Assessing Officer's failure to address the petitioner's adjournment request as a violation of natural justice.

Consequently, the Court set aside the impugned Assessment Order, notice of demand, and penalty notices for the Assessment Year 1995-96. The matter was remanded back to the Assessing Officer with directions to grant a personal hearing via Video Conferencing after serving a copy of the draft Assessment Order, followed by a reasoned order in compliance with the law. The writ petition and pending applications were disposed of, with instructions for uploading the order on the website and forwarding copies to the counsel via email.

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