Demand Notice Quashed Due to Technical Glitches; Court Rules Assessment Year 2015-16 as Income Zero.

The HC quashed the demand notice dated 19th March 2024 for the assessment year 2015-16, finding it inconsistent with the assessment order that determined the recomputed income as Rupees Zero. The court held that the demand notice was issued erroneously due to technical glitches, rendering it unsustainable. The writ petition was disposed of without costs, directing parties to adhere to the server copy of the court's order.

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Issues:
Challenge to demand notice under Section 156 of the Income Tax Act, 1961 for assessment year 2015-16.

Analysis:
The petitioner filed a writ petition challenging the demand notice issued under Section 156 of the Income Tax Act, 1961 for the assessment year 2015-16. The petitioner had received various notices under different sections of the Act, culminating in an assessment order dated 19th March 2024, where the recomputed income was assessed at Rupees Zero. However, despite this assessment, a demand notice was issued for a sum of Rs.4,06,122/- towards differential tax payable by the petitioner, inclusive of interest. The petitioner contended that the demand notice was contrary to the assessment order and not sustainable. The matter was brought before the court for consideration.

During the proceedings, the advocate for the respondents acknowledged that the assessment order had indeed recomputed the total income as Rupees Zero based on the return filed by the petitioner. He attributed the issuance of the demand notice to technical glitches, admitting that no demand should have been raised contrary to the assessment order. After hearing arguments from both sides and examining the records, the court observed that since the Faceless Assessment Unit had accepted the income as Rupees Zero and concluded that no adverse inference could be drawn, issuing a demand notice based on the same income was improper. The court found that the demand notice was issued mechanically, without considering the assessment order, and the computation sheet attached to it was inconsistent with the assessment order.

Consequently, the court held that the demand notice dated 19th March 2024 for the assessment year 2015-16 could not be sustained and quashed the same. The writ petition was disposed of without any costs, with directions for all parties to act based on the server copy of the court's order downloaded from the official website.

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