Court quashes assessment order, penalty, demand notice for violating natural justice. Procedural fairness emphasized.

The Court allowed the petition, quashing the assessment order, penalty proceedings, and demand notice, emphasizing the violation of natural justice principles by not granting the petitioner an opportunity to respond to a show-cause notice. The Court highlighted the importance of procedural fairness and directed the Assessing Officer to restart proceedings by providing the petitioner with a hearing opportunity in compliance with legal procedures.

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Issues:
Seeking directions to quash and set aside the assessment order under the Income Tax Act for Assessment Year 2020-21.

Analysis:
The petitioner, a company providing education services, filed a return declaring a loss for A.Y. 2020-21. The assessment was scrutinized due to discrepancies in property valuation. Despite requesting an adjournment to respond to a show-cause notice proposing a significant addition, the petitioner's request was not granted, and the assessment order was passed without considering the response. The petitioner challenged this action, citing violations of natural justice principles.

During the hearing, the petitioner's advocate argued that Section 144B of the Act mandates considering the assessee's response before finalizing the assessment order. He highlighted the short notice given for response due to weekend days and the subsequent closure of the e-submission portal, preventing the petitioner from submitting a reply. The advocate emphasized the violation of natural justice principles and cited a relevant court decision in support.

On the other hand, the Standing Counsel for the respondent contended that due procedure was followed, and the assessee had opportunities to respond to previous notices. He disputed the claim of lack of consideration for the adjournment request and the closure of the e-submission portal, asserting that the assessment was conducted fairly and in compliance with the law.

After considering both parties' arguments, the Court noted the failure to grant the petitioner an opportunity to respond to the show-cause notice proposing a substantial addition, which was prejudicial to the assessee's interest. This lack of opportunity violated natural justice principles and rendered the assessment non est as per Section 144B(9). Consequently, the Court allowed the petition, quashing the assessment order, penalty proceedings, and demand notice. The Assessing Officer was granted the liberty to restart the proceedings from the stage of providing the petitioner with a hearing opportunity, emphasizing compliance with legal procedures.

In conclusion, the Court ruled in favor of the petitioner, emphasizing the importance of adhering to procedural fairness and providing adequate opportunities for the assessee to respond before finalizing assessment orders under the Income Tax Act.

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