Mauna M. Bhatt, J
1. This petition is filed seeking directions to quash and set aside the assessment order framed under Section 143(3) read with Section 144B of the
Income Tax Act, 1961 (hereinafter referred to as “the Actâ€), dated 29.09.2022, for Assessment Year 2020â€"21.
2. The facts in brief are;
2.1 The petitioner is a Company incorporated on 01.08.2019, registered u/s. 8 of the Companies Act, 2013 and engaged in providing education related
services. For A.Y. 2020â€"21, the assessee filed its return of income declaring total loss of Rs.20,295/-. The said return was selected for scrutiny and
notices calling for certain details/information were issued from time to time. It is case of the assessee that the main reason for scrutiny assessment
was that the purchase value of property is substantially less than the value as per the Stamp Duty Authority. The assessee replied to the notices and
explained its claim. However, vide show-cause notice dated 16.09.2022, addition of Rs.1,85,55,000/- u/s. 56(2)(x) of the Act was proposed. In the said
show-cause, the response of the assessee was called for latest by 20.09.2022, 04:13 p.m. It is case of the petitioner that 17th and 18th September
being Saturday and Sunday, only one working day was available to the assessee to respond to the show-cause notice, therefore it requested for
adjournment till 23.09.2022. The reason given for adjournment was, gathering of materials from multiple sources, and thus, two more days of
adjournment was sought for. However, when the petitioner tried to submit the response on 22.09.2022, e-submission was closed, and therefore,
petitioner filed grievance application on 22.09.2022. One another grievance application on 23.09.2022 was filed and the same was closed informing
that e-submission was closed by the Assessing Officer. It is further case of the petitioner that without responding to the adjournment request dated
20.09.2022, an assessment order u/s. 143(3) r.w.s. 144B of the Act came to be passed, in which the additions proposed in draft assessment order
were made, and penalty proceedings u/ s. 271AAC of the Act is also initiated.
2.2 Aggrieved by the action of the respondent in not acceding to the request of the petitioner dated 20.09.2022, seeking adjournment to respond to the
show-cause notice dated 19.09.2022, present petition is filed.
3. Heard learned advocate Mr. Hardik V. Vora for the petitioner and learned Standing Counsel Mr. Karan G. Sanghani for learned Standing Counsel
Mr. Nikunt K. Raval for the respondentâ€"Department. Notice for final disposal was issued on 28.11.2022. Considering the issue involved and with
the consent of the parties, present petition is taken up for final hearing.
4. Appearing for the petitioner, learned advocate Mr. Hardik Vora submitted that Section 144B of the Act requires assessment unit to take into
consideration response received from assessee before making revised draft assessment order and before passing final assessment order by National
Faceless Assessment Centre (NFAC). He further submitted that in the present case, draft assessment order proposing to make addition of
Rs.1,85,55,000/- u/s. 56(2)(x) of the Act was passed on 16.09.2022 calling upon the assessee to submit its response latest by 20.09.2022, 04:14 p.m.,
17th and 18th September being Saturday and Sunday, only one day was available to the petitioner, and therefore, a request for adjournment was made
on 20.09.2022 to grant time till 23.09.2022. The reason for seeking adjournment was for gathering of materials from multiple sources. However, the
A.O. ignored the petitioner’s request and closed the e-submission portal. The two grievance applications filed on 22.09.2022 and 23.09.2022 were
also not considered by the Authority. The final assessment order u/s. 143(3) r.w.s. 144 of the Act was passed on 29.09.2022, without reply of the
assessee and thus, there is clear violations of principle of natural justice. In support of his submissions, he relied upon the decision of this Court in
Special Civil Application No.7731 of 2021.
5. Learned Standing Counsel Mr. Karan G. Sanghani for learned Standing Counsel Mr. Nikunt K. Raval for the respondentâ€"Department, on the
other hand, referring to the affidavit-in-reply submitted that the order u/s. 143(3) r.w.s. 144B was passed after following due procedure and after
giving opportunities of filing of reply to the assessee. The replies filed, to the notices issued u/s. 143(2) and 143(1) were considered before passing the
draft assessment order as well as final assessment order. There were exhaustive submissions made by the assessee to the notices issued u/s 143(2),
and they were duly considered, therefore, there is no illegality as alleged. In relation to the adjournment request dated 20.09.2022, he submitted that no
such adjournment request could be seen in the order sheet details. The grievance of the assessee that it could not upload the reply on 23.09.2022 is
also not tenable as e-submissions were closed by the A.O. He, thus, submitted that the order of assessment was passed after providing adequate
opportunities to the assessee and this is not the case of lack of jurisdiction or a case of violation of principles of natural justice.
6. Having considered the submissions of both the parties, we have noticed that adjournment request made by the assessee on 20.09.2022 till
23.09.2022 was not acceded by the A.O. as it is admitted in the affidavit-in-reply that no such request was reflected on the portal. Section 144B(1)xvi
(b) mandates to provide an opportunity to the assessee, in case any variation prejudicial to the interest of the assessee is proposed. It refers to serve a
notice calling upon him to show-cause as to why the proposed variation should not be made. Further Section 144B (9) stipulates that an assessment
made u/s. 143(3) or 144 shall be non est, if such assessment is not made in accordance with the procedure laid down under this section. Therefore, in
our opinion, in the case on hand as the opportunity to respond to the show-cause notice was not made available to the assessee particularly, when the
huge variation/ addition was proposed to be made which is prejudicial to the interest of the assessee, it violates the principles of natural justice.
7. Resultantly, we allow the present petition and quash and set aside the order dated 29.09.2022 passed u/s. 143(3) r.w.s. 144B. The penalty
proceedings and the demand notice are also quashed and set aside, however, we give liberty to the Assessing Officer to initiate the proceedings afresh
from the stage of providing the opportunity to the petitioner of hearing if such request is made, and thereafter, to decide the matter. Needless to say,
that A.O. thereafter is at liberty to pass appropriate orders in accordance with law. It is clarified that this Court has not entered into the merits of the
case. Petition is disposed of accordingly with no order as to costs.
