Natural justice in reassessment: ex parte tax orders were quashed and the matter restored to notice stage for a hearing.

Reassessment proceedings under sections 148A and 144 were interfered with because the assessment, demand notice and bank attachment were made without the assessee's effective participation, despite its plea that it was entitled to deduction under section 80P as a primary agricultural co-operative society. The HC quashed the assessment order, demand notice and attachment order, and restored the matter to the notice stage under section 148A(b) so the assessee could file a response and be heard before further action. The revenue was left free to continue the reassessment process from that stage after affording an opportunity of reply.

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Issues: (i) Whether the impugned assessment order, demand notice and bank attachment order arising from proceedings under sections 148A and 144 of the Income-tax Act, 1961 required interference in writ jurisdiction; (ii) Whether the proceedings should be restored to the notice stage with liberty to respond.

Issue (i): Whether the impugned assessment order, demand notice and bank attachment order arising from proceedings under sections 148A and 144 of the Income-tax Act, 1961 required interference in writ jurisdiction.

Analysis: The assessment was made without the petitioner's participation after proceedings under section 148A(b) and section 148A(d) of the Income-tax Act, 1961, and the petitioner asserted that it was entitled to claim deduction under section 80P of the Income-tax Act, 1961 as a primary agricultural co-operative society. The absence of participation, coupled with the plea that the petitioner could explain the relevant factual position, furnished grounds for interference with the consequential coercive measures.

Conclusion: The assessment order, demand notice and attachment order were quashed.

Issue (ii): Whether the proceedings should be restored to the notice stage with liberty to respond.

Analysis: The Court treated the matter as requiring an opportunity to place the petitioner's response at the stage of notice under section 148A(b) of the Income-tax Act, 1961, before further action was taken.

Conclusion: The proceedings were restored to the stage of notice under section 148A(b), with liberty to file a response and appear on the date fixed.

Final Conclusion: The writ petition succeeded only to the extent of setting aside the adverse assessment and consequential recovery measures, while preserving the revenue's liberty to continue the reassessment process from the notice stage after affording the petitioner an opportunity of response.

Ratio Decidendi: Where reassessment and consequential recovery proceedings are concluded without the assessee's effective participation, the Court may quash the resulting order and restore the matter to the statutory notice stage to ensure an opportunity of hearing.

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