Court invalidates assessment order under Income Tax Act; emphasizes procedural fairness and natural justice.

The court found the impugned assessment order invalid due to non-compliance with procedures under Section 144B of the Income Tax Act. The order, calculating total income and issuing a demand notice, was quashed. The court emphasized the necessity of procedural fairness and natural justice, highlighting violations of the Faceless Assessment Scheme. The Respondent's failure to provide adequate time for response and issue necessary notices rendered the assessment order non est. Consequently, the order and demand notice were set aside, allowing for fresh proceedings. The writ petition was disposed of without costs.

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Issues Involved:
1. Validity of the impugned assessment order dated 18th April 2021.
2. Compliance with the Faceless Assessment Scheme under Section 144B of the Income Tax Act.
3. Adequacy of time provided to the Petitioner for response.
4. Principles of natural justice and procedural fairness.

Issue-wise Detailed Analysis:

1. Validity of the Impugned Assessment Order:
The Petitioner sought the quashing and setting aside of the impugned assessment order dated 18th April 2021, which computed the total income at Rs. 62,18,03,460 and issued a consequent demand notice of Rs. 63,35,29,950. The court found that the assessment order was passed without adhering to the mandatory procedures under Section 144B of the Income Tax Act, making the order non est (invalid).

2. Compliance with the Faceless Assessment Scheme under Section 144B:
The Faceless Assessment Scheme, introduced by the Finance Act, 2018 and incorporated into the Act via Section 144B, mandates specific procedures to ensure fairness and transparency. The court highlighted the necessity of issuing a show cause notice and a draft assessment order to the assessee when variations prejudicial to their interest are proposed. The court noted that the Respondent failed to issue such notices and draft orders, violating Section 144B, rendering the assessment order non est.

3. Adequacy of Time Provided to the Petitioner for Response:
The notice dated 9th April 2021 gave the Petitioner until 6.54 p.m. on 13th April 2021 to furnish the required information. Given the intervening holidays and the prevailing Covid-19 lockdown, the Petitioner effectively had only one working day to respond. Despite the Petitioner’s request for additional time due to these constraints, the Respondent proceeded to finalize the assessment hastily on 18th April 2021 without granting the requested extension, thus failing to provide a reasonable opportunity for the Petitioner to respond adequately.

4. Principles of Natural Justice and Procedural Fairness:
The court emphasized that the principles of natural justice are embedded in the Faceless Assessment Scheme, requiring the issuance of a show cause notice and draft assessment order before passing any order prejudicial to the assessee. The Respondent's failure to comply with these procedural requirements violated the principles of natural justice. The court underscored that procedural fairness is crucial, and non-compliance with Section 144B mandates renders the assessment order invalid.

Conclusion:
The court concluded that the impugned assessment order dated 18th April 2021 was non est due to non-compliance with the mandatory procedures under Section 144B of the Income Tax Act. Consequently, the assessment order and the consequential demand notice were quashed and set aside. The Respondents were permitted to undertake denovo proceedings in accordance with the law. The writ petition was disposed of with no order as to costs.

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