Natural justice in faceless assessment: failure to consider the assessee's reply led to quashing and remand for fresh consideration.

Assessment under section 144 read with section 144B was quashed where the assessee's reply and supporting material were not considered before the adverse order was passed. The High Court noted that the assessment proceeded on an income and loss determination proposal prepared before the detailed reply dated 08.03.2025 was examined, so the disputed TDS and purchase explanations were not evaluated. This failure to take the reply on record and to give an effective opportunity of hearing amounted to a breach of natural justice. The matter was remanded to the Faceless Assessment Unit for fresh de novo consideration after considering the reply and, if requested, affording hearing under section 144B.

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Issues: Whether the assessment order passed under section 144 read with section 144B of the Income-tax Act, 1961 was liable to be quashed for failure to consider the assessee's reply and supporting material, thereby breaching the principles of natural justice, and whether the matter deserved remand for fresh assessment.

Analysis: The assessment was founded on an Income and Loss Determination Proposal generated before the assessee's detailed reply was considered. The record showed that the reply filed on 08.03.2025 was not taken into account while passing the impugned order dated 14.03.2025. The resulting adjudication was therefore made without examination of the assessee's explanation on the disputed TDS and purchase issues. In such circumstances, the Court found a clear procedural lapse and a denial of effective opportunity before adverse action was taken.

Conclusion: The assessment order was quashed and set aside, and the matter was remanded to the Faceless Assessment Unit for fresh de novo consideration after taking the reply on record and granting an opportunity of hearing as contemplated by section 144B, if requested.

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