Assessment Order Overturned; Fresh Assessment Ordered With Rs.40,000 Cost to Adyar Cancer Institute.

The HC set aside the assessment order, imposing a cost of Rs.40,000 payable to the Adyar Cancer Institute within fifteen days. The petitioner was allowed to respond to the show cause notice within this period, with access to the portal for submission. Upon payment and response, tax authorities must provide a fair opportunity for a fresh assessment order within three months, nullifying the penalty order. The writ petitions were disposed of without costs, and related miscellaneous petitions were closed.

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Issues: Challenge of assessment and penalty orders due to lack of reasonable opportunity for contesting proposed addition on merits.

Analysis:
The petitioner challenged an assessment order and penalty order, contending they did not have a fair chance to contest the proposed addition on merits. The issue stemmed from a notice under Section 148A(b) of the Income Tax Act, 1961, issued in relation to the assessment year 2015-16 triggered by information flagged by the Central Board of Direct Taxes. The petitioner's response, detailing a housing loan from a bank and sources of income for property purchase, was rejected for lack of substantiation beyond the bank loan. Despite subsequent notices and show cause opportunities, the petitioner did not participate in proceedings, leading to the impugned orders.

The petitioner's counsel argued about a request for property purchase permission and relocation hindering participation. The respondent's counsel highlighted that all notices were served electronically, with multiple opportunities provided, including Section 142(1) notices and show cause opportunities before the assessment order issuance. The assessment added the full property purchase amount to the petitioner's income, disregarding the documented bank loan evidence, which was not considered due to the petitioner's non-participation, leading to undue hardship.

The court set aside the assessment order subject to a cost of Rs.40,000 to be paid to the Adyar Cancer Institute within fifteen days. The petitioner was granted the opportunity to respond to the show cause notice within the same period, with directed access to the portal for submission. Upon payment and satisfactory reply receipt, the tax authorities were instructed to provide a fair opportunity for a fresh assessment order within three months, nullifying the consequential penalty order. The writ petitions were disposed of with no costs, and related miscellaneous petitions were closed accordingly.

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