Point of Law : In a case where a variation is proposed in draft assessment order or final draft assessment order or revised draft assessment order, and an opportunity is provided to assessee by serving a notice calling upon him to show cause as to why assessment should not be completed as per such draft or final draft or revised draft assessment order.

JUDGMENT :

RAJIV SHAKDHER, J.

1. This writ petition is directed against the assessment order dated 07.06.2021, issued under Section 143(3) read with Section 144B of the Income Tax Act, 1961 (in short ‘the Act’) . The impugned assessment order concerns the assessment year (AY) 2018-2019.

1.1 Besides this, challenge has also been laid to the notice of demand dated 07.06.2021, issued under Section 156 of the Act, as well as notice issued for initiation of penalty proceedings under Section 270A of the Act.

2. Being aggrieved, the petitioner has approached this Court by way of the instant writ petition.

2.1 On 07.07.2021, upon notice being issued in the writ petition, the operation of the impugned assessment order dated 07.06.2021 was stayed.

2.2 On the same date i.e., 07.07.2021, while issuing notice, in paragraph 5 of the said order, the grounds on which, according to the petitioner, the impugned assessment order and the consequential orders of demand and initiation of penalty proceedings were not sustainable, were also, broadly, captured. For the sake of convenience, that part of the said order is extracted hereafter :

“5. Ms. Kavita Jha, learned counsel, who appears on behalf of the petitioner, says that the impugned assessment order is flawed, inter alia, for the following reasons:

i) Firstly, it seeks to tax interest received by the petitioner under Section 28 of the Land Acquisition Act, 1894 (in short "the LAC Act"), which is a capital receipt. In support of this plea, our attention has been drawn to the certificate issued by the Land Acquisition Officer, dated 16.03.2020. This certificate is appended on page 128 of the paper book.

ii) Secondly, the respondents have treated the petitioner differently, inasmuch as, another assessee who received compensation in the form of interest under Section 28 of the LAC Act was not subjected to tax qua that part of his income.

(ii)(a) For this purpose, our attention has been drawn to the assessment order passed in the case of Mr. Jitender Kumar Sharma. The assessment order is appended on page 125 of the paper book.

iii) Thirdly, the impugned assessment order is contrary to the Supreme Court judgement rendered in Commissioner of Income Tax vs. Ghanshyam (HUF), (2009) 8 SCC 412 : 315 ITR 1.”

2.3. Since then, the respondents/revenue have filed a counter-affidavit in the matter.

3. We have heard the learned counsel for the parties.

3.1 According to us, for the moment, what needs to be decided by us in this petition is: whether or not the principles of natural justice have been followed as required under Section 144B of the Act.

3.2 Insofar as the merits of the case are concerned, at this juncture, in our opinion, we are not called upon to examine the same.

4. Therefore, keeping the aforesaid aspects in mind, the following broad facts need to be noticed:

(i) The petitioner had filed his return of income for AY 2018-2019 on 31.03.2019. In the said return, the petitioner pegged his taxable income at Rs. 29,66,880/-.

(ii) The Assessing Officer (AO) picked up the petitioner’s case for scrutiny, and, accordingly, issued a notice under Section 143(2) of the Act on 23.09.2019. Apparently, the AO had also issued several notices under Section 142(1) of the Act between 24.11.2020 and 15.02.2021.

(iii) Ultimately, a show cause notice-cum-draft assessment order was served on the petitioner on 18.03.2021, which gave a very narrow window for responding to the same.

The petitioner was called upon to respond to the same by 23:59 hours ending on 02.04.2021.

(iv) A perusal of the show cause notice-cum-draft assessment order reveals that the AO proposed an addition of Rs.7,34,28,895/- to the taxable income of the petitioner, as income from other sources. Pertinently, this addition was arrived at, based on the following computation noted in the show cause notice-cum-draft assessment order: