Court quashes premature tax assessment, upholds natural justice The Court found a violation of natural justice and Section 144B(1)(xvi)(b) of the Income Tax Act as the draft assessment order was issued before the ...
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The Court found a violation of natural justice and Section 144B(1)(xvi)(b) of the Income Tax Act as the draft assessment order was issued before the deadline for objections. The Court quashed the initial draft assessment order and directed the petitioner to submit objections by a specified date. The Assessing Officer was ordered to issue a new draft assessment order within the set timeline, allowing the petitioner to respond electronically. The Court disposed of the writ petition and related applications accordingly.
Issues: Challenge to draft assessment order and show cause notice under Section 144C(1) of the Income Tax Act, 1961 for non-compliance with Section 144B and violation of natural justice.
Analysis: The petitioner challenged the draft assessment order and show cause notice issued by the Respondents under Section 144C(1) of the Income Tax Act, 1961. The petitioner contended that the Respondents failed to comply with the mandatory provision of Section 144B and violated the principles of natural justice. The Respondents proposed to assess the petitioner's income at a significantly higher amount than the declared loss. The petitioner was given until a specific date to respond to the show cause notice, but the draft assessment order was passed five days before the deadline for filing objections.
The Respondents accepted notice, and the deadline for issuing the draft assessment order was noted to be 30th September, 2021. The Respondents waived their right to file a reply considering the limited time available. The Respondents stated that the petitioner would not seek a personal hearing in the proceedings due to time constraints.
The Court found a violation of the principle of natural justice and Section 144B(1)(xvi)(b) of the Act since the draft assessment order was passed before the deadline for filing objections to the show cause notice. Consequently, the Court quashed the draft assessment order dated 29th August, 2021. The Court directed the petitioner to file its reply/objections to the show cause notice by 24th September, 2021. The Assessing Officer was instructed to pass a fresh draft assessment order by 30th September, 2021. To facilitate the filing of the reply/objections, the Assessing Officer was directed to open functionality on the online portal, and the petitioner was instructed to submit its reply/objections via email.
With these directions, the Court disposed of the writ petition and pending applications.
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