High Court quashes 2018-19 Tax Assessment Order, emphasizes procedural fairness and natural justice

The High Court allowed the writ application challenging the assessment order under the Income Tax Act for A.Y. 2018-19. The Court quashed the assessment order due to the Assessing Officer's failure to consider the applicant's reply and violation of natural justice principles. The matter was remitted back to the Assessing Officer for fresh consideration, emphasizing the need to adhere to procedural fairness and provide the applicant with an opportunity to be heard. The Court granted the writ, setting aside the assessment order, and directed a reevaluation within two months, stressing the importance of upholding natural justice principles in such cases.

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Issues:
Challenge to assessment order under Section 143(3) read with Section 144B of the Income Tax Act, 1961 for A.Y. 2018-19 without considering reply and request for personal hearing.

Analysis:
The writ applicant sought relief through a writ application under Article 226 of the Constitution of India, challenging the assessment order passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961 for A.Y. 2018-19. The applicant raised concerns regarding a significant addition made without considering submissions and requests for personal hearing. The applicant prayed for various reliefs, including quashing the assessment order, staying the demand amount, and seeking interim relief deemed fit by the Court. The Court heard both parties, and it was noted that the case would be disposed of on a short ground without delving much into the facts.

The Court highlighted that a show cause notice and draft assessment order were issued to the applicant for faceless assessment under Section 144B of the Act, with a deadline for reply by a specified date. The applicant did file a reply to the show cause notice, as acknowledged by the Revenue in its affidavit-in-reply. However, the Assessing Officer erroneously stated in the assessment order that there was no response from the applicant, indicating a failure to consider the filed reply. This led the Court to conclude that natural justice principles were violated, necessitating the quashing and setting aside of the assessment order.

Based on the grounds of the Assessing Officer's failure to consider the applicant's reply and the violation of natural justice principles, the Court allowed the writ application, quashed the assessment order, and remitted the matter back to the Assessing Officer for a fresh consideration. The Court emphasized that the Assessing Officer should take into account the applicant's reply and provide an opportunity for the applicant to be heard before passing a final assessment order. The Court refrained from expressing any opinion on the merits of the case, focusing solely on the procedural irregularities observed.

In conclusion, the Court granted the writ application, setting aside the assessment order and directing a fresh consideration by the Assessing Officer within two months. The Court permitted direct service and emphasized the importance of upholding principles of natural justice in such proceedings.

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