Court quashes assessment, remands for fresh notice & hearing, emphasizing natural justice.

The Court allowed the petition, quashed the assessment order and demand notice, and remanded the matter back to the Assessing Officer. The Assessing Officer was instructed to issue a fresh show-cause notice along with the draft assessment order, granting the petitioner an opportunity of personal hearing within a specified timeframe, emphasizing the importance of adhering to natural justice principles.

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Issues:
1. Quashing and setting aside of assessment order under Income Tax Act, 1961 for the assessment year 2018-19 due to breach of principles of natural justice.
2. Violation of principles of natural justice by not providing an opportunity of personal hearing as per Section 144B(7)(vii) of the Act.
3. Consideration of detailed submissions and documents filed by the petitioner in response to the show-cause notice.
4. Alternative efficacious remedy of preferring an appeal before the Commissioner of Income Tax (Appeals).
5. Failure to consider the reply filed by the petitioner in passing the assessment order.
6. Gross violation of principles of natural justice and procedure prescribed under Section 144B of the Act.

Analysis:

1. The petitioner sought to quash the assessment order dated 2nd June, 2021, under Section 143(3) read with Section 144B of the Income Tax Act, 1961, for the assessment year 2018-19, citing a breach of natural justice principles. The petitioner claimed that no opportunity of personal hearing was provided as required by Section 144B(7)(vii) of the Act.

2. The petitioner filed its return of income for the relevant assessment year, which was selected for scrutiny assessment under Section 143(3) of the Act. The Faceless Assessment was conducted under Section 144B, resulting in a draft assessment order determining a total income different from the petitioner's declaration. The petitioner responded to the show-cause notice but the assessment order was passed without considering the petitioner's detailed submissions and evidence.

3. The petitioner's counsel argued that the assessment order was passed in violation of natural justice principles by disregarding the submissions and evidence provided by the petitioner. The counsel referenced previous court decisions to support the claim of procedural irregularities in the assessment process.

4. The respondent's counsel contended that the petitioner could have appealed to the Commissioner of Income Tax (Appeals) instead of filing the petition. It was also argued that the petitioner did not request a personal hearing as per Section 144B(7)(xii) of the Act.

5. Upon review of the submissions, the Court found that the Assessing Officer failed to consider the petitioner's response dated 19th April, 2021, which included additional documents not previously supplied. The Court noted a clear violation of natural justice principles and the prescribed procedure under Section 144B of the Act.

6. Consequently, the Court allowed the petition, quashed the assessment order and demand notice, and remanded the matter back to the Assessing Officer. The Assessing Officer was instructed to issue a fresh show-cause notice along with the draft assessment order, granting the petitioner an opportunity of personal hearing within a specified timeframe, emphasizing the importance of adhering to natural justice principles.

This detailed analysis covers the issues raised in the judgment, highlighting the procedural irregularities and the Court's decision to uphold natural justice principles in the assessment process.

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