Court overturns flawed assessment order for A.Y. 2018-2019 under Income Tax Act citing procedural errors. The court set aside the assessment order for A.Y. 2018-2019 under the Income Tax Act due to the absence of a draft assessment order as required by law, ...
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Court overturns flawed assessment order for A.Y. 2018-2019 under Income Tax Act citing procedural errors.
The court set aside the assessment order for A.Y. 2018-2019 under the Income Tax Act due to the absence of a draft assessment order as required by law, additions made under Section 68 without a show cause notice, and the denial of a personal hearing. The court granted the petitioner's prayer clauses for a Writ of Certiorari and a Writ of Prohibition, quashing the flawed assessment order and preventing further action based on it. The petitioner succeeded in challenging the assessment order on grounds of procedural deficiencies and lack of due process.
Issues: Impugning assessment order under Income Tax Act for A.Y.-2018-2019 due to lack of draft assessment order, addition under Section 68 without show cause notice, and denial of personal hearing.
1. Lack of Draft Assessment Order: The petitioner challenged the assessment order for A.Y.-2018-2019 under the Income Tax Act, citing the absence of a draft assessment order as required under Section 144B. The respondent's affidavit mentioned a show cause notice dated 18th February 2021, which the petitioner argued cannot be considered a draft assessment order. The notice sought additional details and documents, not constituting a draft assessment order. The court found this discrepancy significant and a ground to set aside the assessment order.
2. Addition under Section 68 without Show Cause Notice: The petitioner contested additions under Section 68 of the Act, amounting to significant sums, alleging that these were not mentioned in the draft assessment order or any notices during the assessment proceedings. The respondent did not refute this claim in their affidavit. The court emphasized the importance of issuing a show cause notice to allow the party to respond effectively, as established in legal precedent. The failure to provide this opportunity was deemed a crucial flaw justifying setting aside the impugned order.
3. Denial of Personal Hearing: Despite the petitioner's request for a personal hearing during the assessment proceedings, no such hearing was granted. The court noted that the respondent acknowledged the petitioner's request for a video conference/personal hearing, which was scheduled but could not be held due to technical issues. The court considered the denial of a personal hearing as a significant procedural irregularity, further supporting the decision to set aside the assessment order.
4. Judgment and Relief: After considering arguments from both parties and reviewing the petition and affidavit in reply, the court granted the prayer clauses (a) and (c) of the petition. This involved issuing a Writ of Certiorari under Article 226 of the Constitution of India to quash the impugned order and a Writ of Prohibition to prevent further action based on the flawed assessment order. The petition was disposed of with no order as to costs, indicating a favorable outcome for the petitioner in challenging the assessment order based on procedural deficiencies and lack of due process.
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