Faceless assessment violated natural justice where the reply and adjournment request were ignored before finalising the order.

Under faceless assessment, failure to allow adequate notice time, consider an adjournment request, and take into account a timely filed reply before passing the final order vitiates the assessment for breach of Section 144B and natural justice. The final show cause notice allowed less than the prescribed seven days, the assessee's email objections were already on record, and the adjournment request was not addressed. The Bombay HC held that the record did not support a finding that no reply had been furnished, set aside the assessment order and consequential demand and penalty proceedings, and restored the matter to the show-cause stage for fresh consideration with portal reopening and a video-conference hearing.

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Issues: Whether the faceless assessment order and consequential demand and penalty proceedings were vitiated for want of adequate opportunity, non-consideration of the assessee's adjournment request and reply, and breach of Section 144B of the Income-tax Act, 1961 and the principles of natural justice.

Analysis: The final show cause notice granted less than the prescribed seven days under the assessment scheme, the adjournment request was not dealt with, and the assessee had in fact transmitted its objections by email before the assessment order was passed. The record therefore did not justify the finding that no reply had been furnished. Section 144B(1)(xv) required consideration of the assessee's reply and all material available with the assessment unit before finalising the assessment. On these facts, the assessment was passed without proper consideration of the assessee's response and without a fair opportunity of hearing, amounting to procedural unfairness and breach of natural justice.

Conclusion: The impugned assessment order and consequential proceedings could not be sustained and were set aside.

Final Conclusion: The matter was restored to the stage of the show cause notice for fresh consideration by the faceless assessing authority, with directions to reopen the portal, consider the existing and additional replies, and afford a hearing through video conferencing.

Ratio Decidendi: Under faceless assessment, failure to give adequate notice time, to consider an adjournment request, and to take into account a timely filed reply before passing the final assessment order vitiates the assessment for breach of Section 144B and the principles of natural justice.

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