Assessment Order Overturned: Violation of Natural Justice in Ignoring Timely Response Leads to Reopening for Fair Hearing.

The HC set aside the assessment order dated 15.09.2021 for the assessment year 2013-14, citing a violation of natural justice principles. The Assessing Officer failed to consider the petitioner's timely response to the final notice under Section 144 of the Income Tax Act. The court directed the reopening of the assessment, mandating the inclusion of the petitioner's objections in the reassessment process. The petition was disposed of, ensuring adherence to fair hearing principles in the assessment proceedings.

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Issues:
1. Challenge to assessment order for the assessment year 2013-14.
2. Validity of notice issued under Section 144 of the Income Tax Act.
3. Violation of principles of natural justice in assessment proceedings.

Analysis:
1. The petitioner challenged an assessment order dated 15.09.2021 for the assessment year 2013-14, where the Assessing Officer accepted the declared income of the petitioner. Subsequently, the Assessing Officer issued a notice under Section 148 of the Income Tax Act to reopen the assessment, followed by notices under Section 142(1). Due to the petitioner's non-response, a final notice was issued under Section 144, indicating completion of assessment by best judgment. The petitioner did reply to the final notice within the stipulated time, but the subsequent assessment did not acknowledge this response, resulting in an increased assessed income and proposed penalty proceedings.

2. The High Court found that the assessment order suffered from a violation of principles of natural justice. Despite the petitioner's timely response to the final notice under Section 144, where objections were raised against proposed additions and witness statements, the Assessing Officer proceeded as if there was no response at all. The court noted that the Assessing Officer should have considered the petitioner's objections and requests, even if they were subject to acceptance or rejection, rather than ignoring them entirely. The court emphasized that such actions by the Assessing Officer led to injustice in the assessment process.

3. While acknowledging the general reluctance to interfere in fiscal matters through writ petitions when statutory appeal options are available, the court highlighted that clear instances of breach of natural justice warrant intervention. In this case, due to the blatant disregard of the petitioner's response and violation of fair hearing principles, the court set aside the assessment order dated 15.09.2021. The court directed the reopening of the assessment, emphasizing the importance of considering the petitioner's response dated 10.09.2021 to the final notice under Section 144 in the reassessment process. The petition was disposed of accordingly, ensuring the assessment was conducted in compliance with natural justice principles.

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