The court ruled that an assessment order issued without adhering to principles of natural justice, specifically the right to be heard, is invalid and must be set aside.

JUDGMENT :

PRANAV TRIVEDI, J.

1. Heard learned advocate Mr. S.N. Divatia for the petitioner and learned Senior Standing Counsel Mr. Varun Patel for the respondent.

2. Rule, returnable forthwith. Learned Senior Standing Counsel Mr. Varun Patel waives service of notice of rule for and on behalf of the respondent.

3. Having regard to the controversy involved in this petition, with the consent of the learned advocates for the respective parties, the matter is taken up for final hearing.

4. By way of present petition under Article 226 of the Constitution of India, the petitioner challenges the validity of the Assessment Order passed by the respondent under Section 143 (3) read with Section 144B of the Income Tax Act, 1961 (For short ‘the Act’) on 22.3.2024 for the Assessment Year 2022-23 whereby the respondent has assessed the total income of the petitioner at Rs.49,54,76,100/-.

5. Brief facts giving rise to present petition are as under:

5.1 The Petitioner is a duly incorporated limited liability company and engaged in the business of cotton ginning and pressing unit. The Petitioner maintains regular books of accounts & other records which is subject to statutory as well as tax audit. The petitioner had filed its return of income for A.Y. 2022-23 on 04.11.2022 declaring total income of Rs. 16,87,700/-. The return of income was processed u/s.143(1) of the Act. Thereafter, the case of the petitioner was selected for scrutiny on issues of substantial payment to non-GST entities, high liabilities compared to low income/receipts and directors in the company whose registration has been cancelled by MCA.

5.2 It is the case of the petitioner that during the course of assessment proceedings, the respondent issued notices for hearing and asking for the details/explanation from time to time. The respondent issued notice under Section 143 (2) of the Act on 1.6.2023 stating that the case of the petitioner was selected for scrutiny under Computer Assisted Scrutiny Selection (CASS). The petitioner states that it was a formal notice of jurisdiction. The respondent, thereafter, issued notice under Section 142(1) of the Act on 16.10.2023 and the petitioner sought adjournment vide response uploaded on 30.10.2023. The details were filed on 11.11.2023 and the case was adjourned to 14.11.2023. Thereafter, the respondent issued another Notice under Section 142(1) of the Act on 30.1.2024 and the petitioner again sought adjournment vide response uploaded on 24.2.2024. Another notice under Section 142(1) was issued by the respondent on 14.2.2024 and the petitioner uploaded the response on 24.2.2024. The respondent issued another notice under Section 142(1) of the Act on 26.2.2024 and the petitioner uploaded the response on 4.3.2024. Thereafter, show-cause notice-cum-draft Assessment Order was issued on 5.3.2024 seeking response on or before 11.3.2024 wherein the petitioner was asked to show cause as to why addition in income should not be made. However, the petitioner in reply to the aforesaid show-cause notice filed reply dated 11.3.2024 and sought adjournment. The final impugned order of assessment was passed by the respondent on 22.03.2024 determining the total income at Rs.49,54,76,100/- wherein the Assessment Officer made addition of Rs.49,37,88,400/- towards alleged bogus purchases and disallowance under Section 40A(3) of the Act.

5.3 It is the case of the petitioner that the Respondent had uploaded SCN cum draft assessment order on 05.03.2024 at 19:22 IST asking the response to be submitted by 11:00 hours of 11/03/2024. The respondent in the SCN had proposed that the total purchases from unregistered persons amounted to Rs. 49,37,88,400/- and by applying GST rate at 5% on such purchases, the ITC claim of Rs. 2,46,89,420/- on the supplies receive