High Court sets aside assessment order for lack of proper consideration violating natural justice principles, remands for fresh hearing

The High Court set aside the assessment order for lack of proper consideration of the petitioner's response, violating natural justice principles. The Court remanded the proceedings for fresh consideration, granting the petitioner a fair opportunity to be heard and not requiring a statutory appeal due to procedural irregularities. Certain provisions of the Income Tax Act were left open for future review.

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Issues: Challenge to assessment order under E-Assessment Scheme-2019 based on breach of natural justice principles.

Detailed Analysis:
1. Issue: Challenge to assessment order under E-Assessment Scheme-2019.
- Analysis: The writ petition filed under Article 226 of the Constitution of India challenges the assessment order dated 14.05.2021 passed under Section 143(3) read with Section 144-B of the Income Tax Act, 1961. The petitioner alleges a breach of natural justice principles in the assessment process.

2. Issue: Breach and non-compliance of principles of natural justice.
- Analysis: The petitioner argues that there was a lack of proper and sufficient opportunity granted to respond to the show cause notice issued by respondent no.1. Despite the petitioner's request for an adjournment on medical grounds and submission of a detailed reply on 21.04.2021, the assessment order issued on 14.05.2021 did not consider the petitioner's response, leading to a denial of a fair opportunity.

3. Issue: Respondent's stance and legal arguments.
- Analysis: The respondent no.3 contends that the assessment order was passed after considering all material on record and that no new facts were presented by the petitioner in the reply dated 21.04.2021. It is argued that due opportunity was provided, and the petitioner had the option of statutory appeal under Section 264 of the Income Tax Act, 1961.

4. Issue: Judicial findings and decision.
- Analysis: The High Court found that the assessment order was passed without granting a proper opportunity to the petitioner to respond to the show cause notice. Despite the petitioner filing a reply before the assessment order was issued, the respondent did not consider it. The Court held that the assessment order lacked proper consideration of the petitioner's response, leading to a violation of natural justice principles.

5. Issue: Remedy and future course of action.
- Analysis: The Court set aside the assessment order dated 14.05.2021 and remanded the proceedings to respondent no.1 for a fresh consideration in accordance with the law, ensuring a proper opportunity for the petitioner to be heard. The petitioner was not required to pursue the statutory appeal given the procedural irregularities. The challenge to certain provisions of the Income Tax Act was kept open for future consideration.

This detailed analysis highlights the key legal issues, arguments presented, judicial findings, and the subsequent remedy provided by the High Court in response to the challenge to the assessment order based on the breach of natural justice principles.

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