Facts of the Case

  • The case pertains to Assessment Year (AY) 2021–22.
  • A show cause notice dated 07.06.2023 was issued proposing variation in taxable income.
  • The petitioner was given time until 09.06.2023 (11:00 hrs) to respond.
  • The petitioner submitted a reply within the stipulated time, duly acknowledged.
  • However, the Assessing Officer passed an assessment order dated 27.06.2023 under Sections 143(3) read with 144B without considering the reply.

Issues Involved

  1. Whether passing an assessment order without considering the assessee’s reply violates principles of natural justice.
  2. Whether such an order under Sections 143(3) and 144B is sustainable in law.

Petitioner’s Arguments

  • The petitioner contended that the reply to the show cause notice was duly filed within time.
  • The Assessing Officer failed to consider the reply before passing the assessment order.
  • This omission resulted in a clear violation of principles of natural justice.
  • The assessment order was therefore arbitrary and liable to be set aside.

Respondent’s Arguments

  • The Revenue, upon perusal of records, could not dispute that the petitioner’s reply existed.
  • It was effectively conceded that the reply was not considered while passing the impugned order.

Court Findings / Order

  • The Court held that there was a clear breach of principles of natural justice.
  • The assessment order dated 27.06.2023 was set aside.
  • The Assessing Officer was granted liberty to:
    • Pass a fresh assessment order,
    • Consider the petitioner’s reply,
    • Provide an opportunity of personal hearing,
    • Pass a reasoned (speaking) order.
  • The Court clarified that:
    • The order does not affect the merits of the case.

Important Clarifications by Court

  • Non-consideration of reply itself constitutes violation of natural justice.
  • Even under faceless assessment scheme (Section 144B), procedural fairness must be strictly followed.
  • Opportunity of hearing and proper consideration of submissions is mandatory.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/60818072023CW94442023_104032.pdf

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