Tax Assessment Order Quashed: Breach of Natural Justice Leads to Remand for Fresh Hearing and Fair Opportunity.

The HC quashed the assessment order dated 29.03.2022 due to a breach of natural justice, as the petitioner was not given a fair opportunity to respond under Section 144B of the Income Tax Act. The matter was remanded to the Assessing Officer for a fresh de novo order, allowing the petitioner to file a reply and be heard. The AO was instructed to issue a new assessment order within 12 weeks, considering the petitioner's previous replies. The petition was dismissed, and the notice was discharged.

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Issues:
Opportunity of hearing not provided to the petitioner as per Section 144B of the Income Tax Act, breach of principle of natural justice in the assessment order.

Analysis:
The petitioner filed a petition under Article 227 of the Constitution of India seeking to quash the assessment order dated 29.03.2022, alleging inadequate opportunity of hearing by the respondent-Assessing Officer. The petitioner had initially filed the return of income for the Assessment Year 2017-2018 on 20.02.2018. Subsequently, a notice under section 148 of the Income Tax Act, 1961 was issued for re-assessment. The E-assessment process was conducted, and various notices were exchanged between the parties. The respondent-Assessing Officer issued a draft assessment order on 27.03.2022, providing only 24 hours for the petitioner to file a reply, and then passed the assessment order on 29.03.2022 without considering the replies filed earlier by the petitioner.

The petitioner argued that the short time provided for responding to the show-cause notice was insufficient, citing precedents where similar situations led to remanding the matter back to the Assessing Officer for a fresh order. The Senior Standing Counsel for the respondent did not contest the fact that only 24 hours were given for the reply. The High Court observed that the impugned assessment order did not reference the previous replies filed by the petitioner, nor did it mention the show-cause notice issued along with the draft assessment order. The Court held that the failure to provide an opportunity of hearing breached the principle of natural justice.

Consequently, the High Court quashed and set aside the assessment order dated 29.03.2022 and remanded the matter back to the Assessing Officer. The Assessing Officer was directed to pass a fresh de novo order after allowing the petitioner to file a reply to the show-cause notice and providing an opportunity of hearing. The Court clarified that it did not delve into the merits of the case and instructed the Assessing Officer to consider the petitioner's replies and issue a new assessment order within 12 weeks from the date of the order. The petition was dismissed, and the notice was discharged.

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