Court sets aside assessment order for LLP in real estate business citing breach of natural justice principles.

The court annulled the assessment order and demand notices issued under the Income Tax Act, 1961 for the assessment year 2018-19, due to a breach of natural justice principles in the assessment proceedings involving a limited liability partnership [LLP] firm engaged in real estate business. The court emphasized the importance of upholding natural justice, setting aside the assessment order and directing the Assessing Officer to reconsider the case with the petitioner given four weeks to provide additional replies and documents. Fair procedures and reasonable opportunities for taxpayers to respond were highlighted for a just assessment process.

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Issues:
Challenge to assessment order and demand notices under Income Tax Act, 1961 for the assessment year 2018-19. Claim of limited liability partnership [LLP] firm against breach of natural justice in assessment proceedings.

Analysis:
The writ petition challenges the assessment order dated 29.09.2021 passed by respondent No.3 for the assessment year 2018-19, along with demand notices issued under various sections of the Income Tax Act, 1961. The petitioner, a limited liability partnership [LLP] firm engaged in real estate business, contends that the assessment proceedings lacked natural justice principles. The petitioner was selected for scrutiny on income and property issues, with proceedings under the Faceless Assessment Scheme, 2019. The petitioner claims inadequate time to respond to notices, leading to the assessment order being concluded on 29.09.2021, allegedly breaching principles of natural justice.

The petitioner argues that the short notice provided for objections, and the subsequent assessment order passed without considering the petitioner's reply, violated natural justice principles. Citing legal precedents like the High Court of Bombay and the Hon'ble Apex Court rulings, the petitioner asserts that the violation of natural justice exceptions justifies the writ petition despite the availability of alternative remedies. The respondent's contention regarding the petitioner's status as resident or non-resident influencing the assessment order is noted.

Upon careful consideration, the court finds merit in the petitioner's arguments regarding the breach of natural justice. Referring to legal principles from the Hon'ble Apex Court and the High Court of Bombay, the court emphasizes the importance of upholding natural justice in assessment proceedings. The court sets aside the assessment order and demand notices, restoring the proceedings to the Assessing Officer for reconsideration. The petitioner is granted four weeks to file additional replies and documents, with instructions for the Assessing Officer to conduct the assessment promptly and in accordance with the law.

In conclusion, the court's decision to annul the assessment order and demand notices underscores the significance of natural justice in assessment proceedings. The judgment emphasizes the need for fair procedures and reasonable opportunities for taxpayers to respond, ensuring a just and lawful assessment process. The restoration of proceedings to the Assessing Officer with specific directives aims to uphold the principles of natural justice and facilitate a fair reconsideration of the petitioner's case.

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