Assessment order quashed for ignoring the assessee's reply and denying fair hearing before final decision.

An assessment order that ignored a duly received reply and proceeded on the incorrect assumption that no response had been filed was unsustainable for non-application of mind and breach of fair procedure. The court noted that the assessee's earlier reply and later reply were both on record, yet the authority failed to consider them before finalising the order. Because the circumstances also attracted the requirement of personal hearing, the order was set aside and the matter remitted for fresh consideration after taking the replies into account and granting a hearing if required.

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Issues: Whether the assessment order was liable to be quashed for failure to consider the assessee's replies and for non-compliance with the requirement of opportunity of personal hearing.

Analysis: A prior detailed show cause notice had already been replied to, and a later reply dated 14.10.2020 was also received and acknowledged by the assessing officer. The impugned order proceeded on the footing that no reply had been filed to the DRC-01 notice issued under Rule 142(1), even though the earlier reply was already on record. Since the reply was received shortly before the online summary notice, the omission to consider it amounted to non-application of mind and violated fair procedure. The circumstances also attracted the requirement of hearing contemplated under Section 75(4).

Conclusion: The assessment order was unsustainable and had to be set aside, with the matter remitted for fresh consideration after taking into account the replies and granting an opportunity of personal hearing if required.

Final Conclusion: The dispute was sent back to the assessing authority for a fresh decision in accordance with law after consideration of the assessee's replies and, if necessary, after hearing the assessee.

Ratio Decidendi: An assessment order that ignores a duly received reply and proceeds on an incorrect assumption of no response suffers from non-application of mind and is liable to be quashed, particularly where fair hearing requirements apply.

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