Assessment Order Overturned: Fundamental Error Found Due to Discrepancies Between Notice and Order, Jurisdiction Valid in UP.

The HC set aside the assessment order dated 27.03.2024, citing a fundamental error due to discrepancies between the show cause notice and the assessment order. The Court ruled that territorial jurisdiction was valid in Uttar Pradesh, rejecting the revenue's objection. The petitioner was granted three weeks to submit a final reply and attend a personal hearing, emphasizing the need for rectifying assessment process errors.

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Issues involved:
The issues involved in this case are the territorial jurisdiction of the High Court regarding the assessment order passed by the Faceless Assessment Center under Section 144-B of the Income Tax Act, 1961, and the discrepancy between the additions proposed in the show cause notice and the additions made in the assessment order.

Territorial Jurisdiction:
The High Court addressed the issue of territorial jurisdiction concerning the assessment order passed by the Faceless Assessment Center. The petitioner's PAN is mapped to a jurisdictional assessing authority in Uttar Pradesh, even though the return for the assessment year 2022-23 was filed from a different state. The Court emphasized that the geographical location of the assessing authority is not crucial under the faceless assessment scheme. It was ruled that the residence of the assessee in the PAN registration details is vital in determining territorial jurisdiction. The Court rejected the preliminary objection raised by the revenue regarding territorial jurisdiction, stating that a significant part of the cause of action had arisen in Uttar Pradesh.

Discrepancy in Assessment Order:
Regarding the discrepancy between the additions proposed in the show cause notice and those made in the assessment order, the Court found that the assessment order exceeded the show cause notice. The petitioner contended that the additions in the assessment order surpassed the proposed variations in the notice. The Court noted an inadvertent mistake in the assessment order, leading to the conclusion that it could not be sustained. Consequently, the assessment order dated 27.03.2024 was set aside, and the petitioner was granted the opportunity to provide a further reply within three weeks. The Court rejected the notion of an alternative remedy, considering the fundamental error in the assessment order.

Conclusion:
The High Court disposed of the petition, setting aside the assessment order and allowing the petitioner to address the adverse findings. The petitioner was instructed to submit a final reply within three weeks and attend a personal hearing before the assessing authority. The Court emphasized the importance of rectifying errors in the assessment process and providing the petitioner with an opportunity to present their case effectively.

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