Reassessment void for breach of natural justice where taxpayer given under 12 hours, documents withheld, and cross-examination denied

HC allowed the writ, holding the reopening and draft assessment void for breach of natural justice because the respondent afforded under 12 hours to reply, failed to supply requested documents and denied opportunity to cross-examine a material witness. The court found the time and absence of requested materials/precluded cross-examination prevented a reasonable opportunity to defend, and therefore the reassessment proceedings were set aside in favour of the assessee.

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Issues Involved:
1. Violation of principles of natural justice.
2. Adequate opportunity of hearing.
3. Alternative efficacious remedy.

Summary:

Violation of principles of natural justice:
The petitioner argued that the act of giving only 12 hours to file a reply to the show cause notice by the respondents is in clear violation of the principles of natural justice. The petitioner hurriedly filed a part submission and requested an opportunity for a hearing through video conference, which was provided. However, the petitioner was not granted the opportunity to cross-examine Mr. Saurabh Kathwadia, whose statement was crucial to the case. The court noted that the respondents failed to provide the documents requested by the petitioner for cross-verification, thus violating the principles of natural justice.

Adequate opportunity of hearing:
The petitioner contended that the respondents did not grant adequate opportunity of hearing. Despite submitting a reply to the show cause notice-cum-draft assessment order within the given 12 hours, the petitioner requested certain documents and the opportunity to cross-examine a key individual, which were not provided. The court emphasized that reasonable and adequate opportunity was required to be given, and the failure to do so warranted the quashing of the impugned order.

Alternative efficacious remedy:
The respondent's counsel argued that the petitioner had an alternative efficacious remedy to file an appeal before the Appellate Authority. However, the court found that the lack of adequate opportunity of hearing and the violation of natural justice principles justified the court's intervention without directing the petitioner to the alternative remedy.

Conclusion:
The court allowed the petition, quashing and setting aside the impugned assessment order dated 31.03.2022. It clarified that this decision does not preclude the respondent from initiating any action from the stage it was left, provided the petitioner cooperates. The court did not examine the merits of the petitioner's case.

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