Court quashes assessment order, allows fresh proceedings. Petitioner to cooperate.

The Court quashed the assessment order dated 06.02.2021 and all consequential proceedings, granting the respondent liberty to initiate fresh proceedings by issuing a show cause notice-cum-draft assessment order within four weeks. The petitioner was directed to cooperate with the respondent authority in the fresh assessment process. The Court held that the absence of the mandatory show cause notice-cum-draft assessment order necessitated interference, emphasizing compliance with the E-assessment Scheme, 2019. Additionally, the Court asserted jurisdiction based on a fraction of the cause of action arising in Gujarat, allowing it to decide the matter.

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Issues Involved:
1. Violation of principles of natural justice.
2. Noncompliance with the E-assessment Scheme, 2019.
3. Jurisdictional challenge.

Detailed Analysis:

1. Violation of Principles of Natural Justice:
The petitioner argued that the assessment order dated 06.02.2021 was passed without issuing a show cause notice-cum-draft order, which is a gross violation of the principles of natural justice. The Court noted that the E-assessment Scheme, 2019 mandates the issuance of a draft assessment order to provide the assessee an opportunity to respond before finalizing the assessment. The Court referenced the case of Gandhi Realty (India) (P.) Ltd., which held that the issuance of a show cause notice-cum-draft assessment order is a mandatory requirement. The Court concluded that the absence of this step in the assessment process necessitates interference.

2. Noncompliance with the E-assessment Scheme, 2019:
The petitioner contended that the assessment was completed without following the mandatory procedures outlined in the E-assessment Scheme, 2019. The Court examined the scheme, which requires the National e-Assessment Centre (NeAC) to serve a notice specifying the issues for assessment, obtain further information if needed, and provide an opportunity to the assessee to respond to a draft assessment order. The Court found that the respondent failed to issue a show cause notice-cum-draft assessment order, violating the scheme. The Court cited the Delhi High Court's decision in Interglobe Enterprises Private Limited, which emphasized the mandatory nature of issuing a prior show cause notice-cum-draft assessment order under Section 144(B)(7).

3. Jurisdictional Challenge:
The respondent argued that the Gujarat High Court lacks territorial jurisdiction as the assessee is assessed by the Income Tax Officer, Ward-1, Churu, Rajasthan. The Court noted that the petitioner had already requested the transfer of its PAN from Churu to Ahmedabad, and the Income Tax Officer at Churu had no objection to this transfer. The Court referenced the Supreme Court's decision in Rajendran Chingaravelu, which held that even a small fraction of the cause of action arising within the jurisdiction of a state confers jurisdiction to that state's courts. The Court concluded that part of the cause of action arose in Gujarat, giving it jurisdiction to decide the matter.

Conclusion:
The Court quashed the assessment order dated 06.02.2021 and all consequential proceedings. The respondent was granted liberty to initiate fresh proceedings by issuing a show cause notice-cum-draft assessment order within four weeks, providing the petitioner an opportunity to respond. The petitioner was directed to cooperate with the respondent authority in the fresh assessment process.

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