Court quashes assessment, directs revenue to follow proper procedures for assessment under Income Tax Act

The Court allowed the petition, quashed the assessment order and demand notice, and directed the revenue to proceed with the assessment process under Section 144B read with Section 144C after issuing the final notice-cum-draft assessment order and granting the petitioner an opportunity to respond and seek a hearing. The revenue was instructed to diligently follow the procedures under the Income Tax Act, ensuring compliance with the law's provisions.

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Issues Involved:
Challenge under Article 226 of the Constitution of India regarding Assessment order passed under Section 143(3) read with Section 144B of the Income Tax Act for non-compliance of the law's provisions.

Detailed Analysis:

1. Compliance with Section 144B:
The petitioner challenged the assessment order, alleging non-compliance with Section 144B of the Income Tax Act. The petitioner contended that the respondent failed to adhere to the procedure under Section 144B by not issuing a show cause notice cum draft assessment order for providing an opportunity of hearing. The Court noted the absence of a show cause notice for the proposed variation and emphasized the importance of following the provisions of Section 144B, particularly highlighting clauses 144B(1)(xxv) to (xxxii).

2. Interim Relief and Jurisdictional Assessing Officer:
An order was passed to join the Jurisdictional Assessing Officer as a party respondent. The Court granted an interim relief staying the implementation and operation of the assessment order until a specified date. The Court considered the nature of the litigation and the alleged noncompliance with the law's provisions in deciding to grant the stay.

3. Chronology of Events and Compliance with Law:
The respondent provided a detailed chronology of events related to the draft assessment order's processing. It was acknowledged that only the draft assessment order was served on the Assessee without fixing a reply date or providing a final show cause notice for an opportunity of hearing. The Court emphasized the necessity of serving the final notice along with the draft assessment order as per the provisions of the Income Tax Act to ensure compliance.

4. Legal Precedent and Decision:
Referring to a previous case, the Court reiterated the importance of issuing a prior notice-cum-draft assessment order and providing an opportunity for the assessee to respond. The Court allowed the petition, quashed the impugned assessment order and demand notice, and directed the revenue to proceed with the assessment process under Section 144B read with Section 144C after issuing the final notice-cum-draft assessment order and granting the petitioner an opportunity to respond and seek a hearing.

5. Conclusion and Directions:
The Court allowed the petition, setting aside the assessment order and demand notice. The revenue was directed to follow the procedures under Section 144B and Section 144C of the Income Tax Act diligently, ensuring the petitioner's opportunity to respond and seek a hearing. The revenue was instructed to file the final order within a specified timeframe and permitted direct service through speed post and e-mode in addition to regular modes of service.

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