Assessing Officer’s (AO) order for re-assessment is void and set to be revoked if it violates the principles of natural justice is upheld by the Jaipur bench of Rajasthan High Court through a division bench of Hon’ble Chief Justice Mr. Akil Kureshi and Hon’ble Mr. Justice Sudesh Bansal in the case of Rati Ram Bambelwal v. Pr. CIT and Others.
The brief facts of the case are that petitioner is an individual engaged in the business of trade of jewel commodities. For the assessment year 2013-14 the petitioner declared total income of Rs.2,41,610/-. The return was taken up for scrutiny and the assessing officer issued a notice under Section 148 of the IT Act, 1960. This was followed by notices issued under Section 142(1) of the Act. Since the petitioner did not reply to these notices, the Assessing Officer issued a final notice under Section 144 of the Act and stating that the Assessing Officer desired to complete the assessment by way of best judgment as he has not replied to earlier notices. Further, he mentions that assessee should response through registered e-mail account. The assessee replied to the said notice which is accepted by the AO. Despite this, the assessment which was carried out through faceless assessment system, did not acknowledge such reply and the contents thereof. The AO made 7 additions to the tune of Rs. 72,14,490/- and proposed penalty.
The Court held that the order of assessment suffers from violation of principles of natural justice. As noted in response to the notice issued by the Assessing Officer under Section 144 the petitioner had filed a response within time permitted wherein he opposed the proposal for making any addition to his declared income. He also disputed the statements of persons on which the Assessing Officer wanted to rely upon. He asked for their cross-examination. It was open for the Assessing Officer to accept or to reject the stand of the petitioner including his request for cross-examination of the witnesses. However he could not have ignored the reply and proceeded to finalize the assessment as if there was no response from the petitioner whatsoever.
Since the AO ignored the reply filled by the assessee the Court held that the assessment order violates the principles of natural justice that is right to be heard under the principle “audi alteram partem and on this ground we are inclined to set aside the order of assessment.” Ordinarily when against an order statutory appeal is available, the Court would be slow in interfering in a writ petition bypassing such appeal route. This is more so in fiscal matters. However when it comes to the clear cut case of breach of principles of natural justice and denial of fair hearing, this self-imposed restriction is not applied. Therefore, the order of assessment suffers from violation of principles of natural justice, is void, and bound to be set aside.
Judgement reviewed by: Paras Jindal