Tax assessment rejecting bank-confirmed evidence without reasons or hearing, violating natural justice; order set aside for fresh decision.

The dominant issue was whether the assessment order suffered from non-application of mind and failure to give reasons, rendering it violative of principles of natural justice. The authority recorded that no reply was filed, yet purported to consider a reply in a cryptic manner, and failed to meaningfully evaluate supporting documents including a bank confirmation letter and bank statement; no reasons were given for rejecting the taxpayer's defence. Applying the settled requirement that administrative and quasi-judicial orders must contain reasons, the HC held the order unsustainable and declined to relegate the taxpayer to alternative remedy. The assessment order was set aside and the matter remitted for fresh hearing and decision in accordance with law, without opinion on merits.

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Issues:
Challenge to assessment order based on contradictory findings and failure to consider relevant documents.

Analysis:
The petition under Article 226 challenges the assessment order dated 19.03.2024, alleging that the findings therein are self-contradictory. The petitioner's reply to the show cause notice, along with supporting documents, was filed within the stipulated time and loaded on the Department's portal. The petitioner's defense, including documents related to certain transactions, was not adequately considered in the assessment order. The petitioner argued that the authority failed to justify disregarding the defense presented. The respondent, represented by the Senior Standing Counsel for Income Tax, contended that the reply was considered, and the petitioner had the option to appeal. The Court emphasized the importance of reasons in administrative and judicial orders, citing precedent to support the necessity of providing cogent and clear justifications for decisions.

The assessment order indicated that the petitioner failed to comply with the show cause notice by the specified date, but later filed a reply on 14.03.2024. The order suggested that the petitioner did not provide sufficient evidence regarding the transactions under scrutiny. However, the Court found that the assessment lacked proper consideration of the documents submitted by the petitioner. The Court highlighted the significance of reasons in decision-making processes, emphasizing that reasons are essential for transparency, accountability, and ensuring justice. The Court referenced previous judgments to underline the importance of recording reasons in administrative and quasi-judicial decisions.

Due to the glaring illegality in the assessment order, the Court set it aside and directed the competent authority to rehear the petitioner's case and make a fresh decision in accordance with the law. The Court clarified that it did not express any opinion on the merits of the case. The writ petition was disposed of with the aforementioned direction, without any order as to costs. Any pending miscellaneous applications related to the petition were also directed to be closed.

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