PRICEWATERHOUSE COOPERS PRIVATE LIMITED vs ASSISTANT COMMISSIONER OF INCOME-TAX,CIRCLE-1(1), AAYAKAR BHAWAN AND ORS

IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
(ORIGINAL SIDE)

Present:
The Hon’ble Justice Smita Das De


WPO 212 of 2026
IA NO: GA/1/2026, GA/2/2026

Pricewaterhouse Coopers Private Limited
-Vs-
Assistant Commissioner of Income Tax, Circle-1(1)
Aayakar Bhawan & Ors.

For the Petitioner : Mr. Aditya Vohra, Adv. (VC)
: Mr. Indranil Banerjee, Adv.
:
Mr. Subrata Mukherjee, Adv.,


For the Income Tax
Authorities

:
:
:
:
Mr. Soumen Bhattacharjee, Adv.
Mr. Anurag Roy, Adv.
Mr. Ankan Das, Adv.
Ms. Shradhya Ghosh, Adv.

Reserved on : 21/05/2026
Judgment on : 25/06/2026


Smita Das De, J.:-

1. The instant writ petition has been filed challenging inter alia, the
Assessment Order dated March 30, 2026 passed under Section 143(3)
of the Income Tax Act, 1961 for the assessment year 2024-25, along
with consequential demand & penalty proceedings, inter alia, on the
grounds of gross violation of principles of natural justice and the
absence of an effective opportunity of hearing.
2. Apropos the facts of the case, is that the Petitioner herein is a
consultancy company, and respondent no 1 is the Jurisdictional

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Assessing Officer (hereinafter referred to as the ‘JAO’) of the petitioner.
Respondent no 2 is the Assessment Unit of the National Faceless
Assessment Centre(NFAC), New Delhi which conducted the
assessment proceedings of the petitioner upto December 22, 2025 and
the respondent no 3 is the Union of India.

3. On November 29, 2024 the petitioner filed its return of income
electronically under Section 139(1) of the Income Tax Act, 1961 on
declaring a loss of Rs 52,27,57,732/-.
4. On January 28,2025 the return of income has been processed under
Section 143(1) of the Income Tax Act,1961 by the Centralized
Processing Centre, Bengaluru resulting in a refund of Rs
134,29,45,540/-. Subsequently, on June 3,2025 the petitioner further
modified its return of income declaring a loss of Rs 42,51,35,850/-.
5. On June 24, 2025 the case of the petitioner has been selected for
scrutiny assessment pursuant to a notice issued under Section 143(2)
of the Income Tax Act, 1961 by the respondent no 2, namely the
Assessment Unit of National Faceless Assessment Centre
(NFAC).Pursuant thereto, the petitioner furnished the requisite
preliminary details along with supporting documents vide reply dated
July 9, 2025 and July 11, 2025.
6. On July 29, 2025 and November 21, 2025, NFAC issued notices under
Section 142(1) of the said Act, to which the petitioner duly responded
on August 18, 2025 and December 16, 2025 respectively.
7. On December 22,2025, the case has been transferred from respondent
no 2 to respondent no 1.Thereafter, respondent no 1 issued further

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notices under Section 142(1) on January 27,2026 and March 6,2026
respectively calling for additional details and documents. In response
thereto, the petitioner filed its reply on March13, 2026.
8. On March12, 2026, respondent no 1 issued a notice under Section
142(1) of the Income Tax Act. The Petitioner duly responded thereto
on March 19, 2026 and further filed two replies on March 25, 2026 .
9. The petitioner has been served with the show cause notice dated
March 28, 2026 issued by respondent no 1, wherein it has been
stated that information has been received from the office of the DCIT,
Central Circle-3, Hyderabad, allegedly implicating the petitioner’s
involvement in acquisition of KSK Energy Ventures Ltd by Gland
Celsus Bio Chemicals Pvt Ltd.
10. By way of the said notice, respondent no 1 sought an explanation
from the petitioner as to whether it had rendered any consultancy,
professional or advisory services in furtherance of the scheme of
acquisition and whether any fees or remuneration had been received
by it from the entities in lieu of the services. Respondent no 1 further
directed the petitioner to furnish relevant supporting documents. The
petitioner has been called upon to submit its reply to the show cause
notice on or before March 30, 2026.
11. On March 30, 2026 the petitioner duly complied with the show cause
notice by furnishing the requisite details and explanations. On the
same day i.e March 30, 2026 the Respondent no 1 proceeded to pass
the Impugned Assessment Order raising a substantial demand of Rs

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87,20,87,760 without affording any reasonable time or opportunity to
the petitioner for a proper hearing .
12. Being aggrieved by the Assessment Order dated March 30, 2026
passed under Section 143(3) of the Income Tax Act, 1961 for the
assessment year 2024-2025 by the respondent authority the
petitioner has filed this instant writ petition.
Contention of the petitioner-
13. Learned Counsel on behalf of the petitioner submits that, for the
Assessment Year 2024-25 petitioner’s case has been selected for
scrutiny Assessment pursuant to a notice issued under Section 143(2)
of the Income Tax Act, by the National Faceless Assessment Centre
(NFAC).
14. It has been submitted that notices under Section 142(1) of the Income
Tax Act, 1961 have been issued by the NFAC on July 29, 2025 and
November 21, 2025 respectively, to which the petitioner duly
responded on August 18, 2025 and December16, 2025 respectively.
15. It has further been submitted that, although a survey under Section
133A of the Income Tax Act, 1961 has been conducted at the office
premises of the petitioner, the scope of the survey has been entirely
focused towards the affairs of its client, Gland Celsus Bio Chemicals
Pvt. Ltd.
16. The petitioner further submitted that, during the relevant previous
year, no services have been rendered, no invoice has been raised and
no fee or income of any nature has been received or accrued from KSK
Energy Ventures Ltd in relation to the acquisition.

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17. Learned Counsel on behalf of the petitioner submits that on December
22, 2025, the proceedings have been transferred to the Jurisdictional
Assessing Officer (JAO) under Section 144B(8) of the Income Tax Act.
Notices under Section 142(1) of the Income Tax Act has been issued
by the Jurisdictional Assessing Officer (JAO) on January 27, 2026,
March 6, 2026 to which the petitioner replied on March 13, 2026. On
March 12, 2026 another notice under Section 142(1) of the said Act
has been issued, to which the petitioner replied on March 19, 2026
and further filed two replies on March 25, 2026.

18. Learned Counsel on behalf of the petitioner places reliance on CBDT
Instructions No. 20/2015, No. 8/2017, No. 1/2018 and Circular no
27/2019 which mandates issuance of show cause notice prior to
making disallowances.
19. Learned Counsel on behalf of the petitioner also places reliance on the
judgment Inox Wind Energy Ltd vs ACIT reported at (2024) 167
taxmann.com 572(Gujarat) wherein the Hon’ble Court held that
issuance of proper show cause notice indicating proposed
disallowances prior to the completion of assessment is mandatory
even when, case is transferred from NFAC to JAO. In the case, the
assessment order has been set aside for violation of principles of
natural justice.
20. Reliance has also been placed by the learned counsel on the judgment
e-Shakti.com Pvt Ltd vs ACIT , WP No. 1260/2020 dated June17,
2021 in which the Hon’ble Court recorded the instructions or
confirmation of the CBDT that principles of natural justice, which are

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enshrined in the procedure for assessment, mandate the issuance of a
show cause notice prior to finalization of assessment order.
21. It has been also submitted that, no opportunity of personal or virtual
hearing has been provided to the petitioner before passing the
Assessment Order. In terms of the well settled principle ‘audi alteram
partem’ a Latin phrase meaning “hear the other side” or “let the other
side be heard as well” no person should be judged without being
afforded a fair hearing, in which each party is given a reasonable
opportunity to respond to the evidence and allegations against it.

22. Learned Counsel also places reliance on the judgment Sahara India
(Firm) vs CIT reported at [2008] 300 ITR 403 (SC) , wherein the
Hon’ble Apex Court held that-
“15. Thus, it is trite that unless a statutory provision either specifically or
by necessary implication excludes the application of principles of natural
justice, because in that event the Court would not ignore the legislative
mandate, the requirement of giving reasonable opportunity of being heard
before an order is made, is generally read into the provisions of a statute,
particularly when the order has adverse civil consequences for the party
affected. The principle will hold good irrespective of whether the power
conferred on a statutory body or tribunal is administrative or quasi-
judicial.”(emphasis supplied )
23. In Radhasoami Satsang vs CIT reported at 193 ITR 321 (SC) and
CIT vs Excel Industries Ltd reported at 358 ITR 295 (SC) it has
been held that no disallowances on similar issue is called for in view
of principles of consistency.
24. Learned counsel places reliance on Godrej Sara Lee Ltd vs Excise
and Taxation Officer & Ors reported in 2023 SCC Online SC 95
where the Court has held that-

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“4 . Before answering the questions, we feel the urge to say a few words
on the exercise of writ powers conferred by article 226 of the Constitution
having come across certain orders passed by the High Courts holding writ
petitions as "not maintainable" merely because the alternative remedy
provided by the relevant statutes has not been pursued by the parties
desirous of invocation of the writ jurisdiction. The power to issue
prerogative writs under article 226 is plenary in nature. Any limitation on
the exercise of such power must be traceable in the Constitution itself.
Profitable reference in this regard may be made to article 329 and
ordainments of other similarly worded articles in the Constitution. Article
226 does not, in terms, impose any limitation or restraint on the exercise of
power to issue writs. While it is true that exercise of writ powers despite
availability of a remedy under the very statute which has been invoked
and has given rise to the action impugned in the writ petition ought not to
be made in a routine manner, yet, the mere fact that the petitioner before
the High Court, in a given case, has not pursued the alternative remedy
available to him/it cannot mechanically be construed as a ground for its
dismissal. It is axiomatic that the High Courts (bearing in mind the facts of
each particular case) have a discretion whether to entertain a writ petition
or not. One of the self-imposed restrictions on the exercise of power under
article 226 that has evolved through judicial precedents is that the High
Courts should normally not entertain a writ petition, where an effective
and efficacious alternative remedy is available. At the same time, it must
be remembered that mere availability of an alternative remedy of appeal
or revision, which the party invoking the jurisdiction of the High Court
under article 226 has not pursued, would not oust the jurisdiction of the
High Court and render a writ petition "not maintainable". In a long line of
decisions, this court has made it clear that availability of an alternative
remedy does not operate as an absolute bar to the "maintainability" of a
writ petition and that the rule, which requires a party to pursue the
alternative remedy provided by a statute, is a rule of policy, convenience
and discretion rather than a rule of law. Though elementary, it needs to be
restated that "entertainability" and "maintainability" of a writ petition are
distinct concepts. The fine but real distinction between the two ought not to
be lost sight of. The objection as to "maintainability" goes to the root of the
matter and if such objection were found to be of substance, the courts
would be rendered incapable of even receiving the lis for adjudication. On
the other hand, the question of "entertainability" is entirely within the
realm of discretion of the High Courts, writ remedy being discretionary. A

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writ petition despite being maintainable may not be entertained by a High
Court for very many reasons or relief could even be refused to the
petitioner, despite setting up a sound legal point, if grant of the claimed
relief would not further public interest. Hence, dismissal of a writ petition
by a High Court on the ground that the petitioner has not availed the
alternative remedy without, however, examining whether an exceptional
case has been made out for such entertainment would not be proper.”
Contention of the Respondent –
25. Per Contra, the learned counsel on behalf of the respondent argues
that the assessee has been provided multiple opportunities to produce
all relevant documents for the scrutiny assessment, vide notice dated
June 24, 2025 under Section 143(2) and subsequent notices under
Section 142(1) dated July 29, 2025 and November 21, 2025 issued by
the FAO and notices under Section 142(1) dated January 27, 2026,
March 6, 2026 and March12,2026 issued by the JAO, but the assesee
failed to provide adequate replies along with requisite document in
response to such opportunities.
26. Learned counsel has on behalf of the respondent has submitted that
the assessee’s reliance on the Circular No. 27/2019 (F.No
225/249/2018-ITA .III) dated September 26, 2019, CBDT Instruction
No. 20/2015 dated December 29, 2015 and CBDT Instruction No.
3/2018 dated August 28, 2018 are unfounded as such circulars has
been issued prior to the insertion of Section 144B in the Income Tax
Act, 1961 and therefore have no bearing on the facts and
circumstances of this instant case.
27. It has also been contended that the assessee has also relied upon the
Circular No F.No 225/97/2021/ITA –II dated September 6, 2021 to

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submit that in cases involving the transfer of assessment from the
Faceless Assessing Officer (FAO) to the Jurisdictional Assessing
Officer (JAO) in exercise of powers under Section 144B(8) of the Act,
the JAO is under a legal obligation to issue a show-cause notice to the
assessee.

28. It has been further submitted that the assessee has failed to
appreciate the true purport of the Circular dated September 6, 2021
in as much as the circular is confined only to show cause notices
issued by the Faceless Assessing Officer (FAO) which remains to be
pending at the time of transfer of assessment proceedings from the
Faceless Assessing Officer (FAO) to the JAO.
29. It has been submitted that the assessee has an efficacious alternative
remedy, as it can prefer an appeal before the concerned appellate
authority without making any pre-deposit, since the demand arising
from the impugned assessment order has already been recovered by
adjustment against the refund available to the assessee for the
subsequent assessment year.
30. Learned counsel on behalf of the respondent places reliance upon a
judgment of Thansing Nathmal & Ors. vs Superintendent of Taxes,
Dhubri & Ors reported at AIR 1964 SC 1419 where the Hon’ble
Court has held that, -
“ ……. Ordinarily the Court will not entertain a petition for a writ under
Article 226, where the petitioner has an alternative remedy, which without
being unduly onerous, provides an equally efficacious remedy. Again the
High Court, does not generally enter upon a determination of questions
which demand an elaborate examination of evidence to establish the right
to enforce which the writ is claimed .The High Court does not therefore act

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as a Court of appeal against the decision of a Court or tribunal to correct
errors of fact, and does not by assuming jurisdiction under Article 226
trench upon an alternative remedy provided by statute for obtaining relief.
Where it is open to the aggrieved petitioner to move another tribunal, or
even itself in another jurisdiction for obtaining redress in the manner
provided by a statute, the High Court normally will not permit by
entertaining a petition under Article 226 of the Constitution the machinery
created under the statute to be bypassed, and will leave the party
applying to it to seek resort to the machinery so set up”.
31. Learned Counsel has also relied upon a judgment Britannia
Industries Limited vs Union of India & Ors reported at 2024 SCC
Online Cal 11482 where the Hon’ble Court has held the importance
of availment of alternative statutory remedies as opposed to
approaching the writ court, and this decision has been affirmed by the
Hon’ble Division Bench in M/s. Britannia Industries Limited vs
Union of India & Ors (MAT 2371 of 2024).
Analysis -
32. The moot questions involved herein as to-
(i) Whether an Assessment Order passed under Section 143(3) of
the Income Tax Act, 1961, along with the consequential demand
and penalty proceedings can be set aside on the ground of gross
violation of the principles of natural justice and denial of
effective opportunity of hearing to the petitioner.
(ii) Secondly, whether the present writ petition under Article 226 of
the Constitution of India is maintainable in law, in view of the
availability of an alternative statutory remedy under the Income
Tax Act, 1961 against the impugned Assessment Order dated
March 30, 2026.

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33. The rule of alternative remedy is a rule of discretion and self restraint
rather than a hard rule of law. It is a settled legal position that
existence of an alternative remedy or an interim order does not bar
this Court from exercising its writ jurisdiction under Article 226 where
there is a manifest violation of principle of natural justice.

34. In Whirlpool Corporation v. Registrar of Trade Marks reported at
(1998) 8 SCC 1 , the Supreme Court held that notwithstanding the
availability of an alternative remedy, a writ petition would be
maintainable where fundamental rights are infringed, there is
violation of principles of natural justice, the impugned proceedings are
wholly without jurisdiction or the vires of a statute is under challenge.
35. The said principle was reiterated in Harbanslal Sahnia v. Indian Oil
Corporation Ltd . reported at (2003) 2 SCC 107 , wherein the
Supreme Court observed that the rule of exclusion of writ jurisdiction
by availability of an alternative remedy is a rule of discretion and not
one of compulsion.
36. The law was authoritatively restated in Radha Krishan Industries v.
State of Himachal Pradesh reported at (2021) 6 SCC 771 , where the

Supreme Court summarized that a writ petition is maintainable
despite an alternative remedy where there has been a violation of
principles of natural justice or where the statutory authority has acted
in defiance of fundamental principles of judicial procedure.
37. Applying the above principles to the present case, it is held that the
impugned assessment order is vitiated by jurisdictional infirmity and
fundamental procedural defects, inasmuch as the mandatory

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requirements under the Income-tax Act, 1961 have not been complied
with, resulting in denial of a fair opportunity of hearing to the
petitioner.
38. In Bharat Aluminium Company Ltd. v. Union of India, reported at
2022 SCC OnLine Del 105 , the Court has observed that where
replies submitted by the assessee are not properly considered and
reasonable opportunity is denied, the assessment order becomes
unsustainable.
39. Similarly, in YCD Industries v. National Faceless Assessment
Centre, reported at (2021) 437 ITR 119 (Del) , it has been held that
the Court can set aside the assessment on the ground that the
assessee has been denied a meaningful opportunity of hearing. The
demand notice and penalty proceedings derive their existence solely
from the impugned assessment order.
40. The principles of natural justice are not satisfied by a mere formality
of issuing notices. The opportunity contemplated under law must be
real, effective and reasonable. An assessee must be informed of the
material proposed to be relied upon and must be granted adequate
opportunity to controvert the same.
41. Where an assessment order entails serious civil consequences,
adherence to the rule of audi alteram partem becomes indispensable.
Any order passed in breach thereof stands vitiated.
42. In the present case, the challenge is not merely to the correctness of
additions made by the Assessing Officer on merits, the challenge
strikes at the very decision-making process. The petitioner alleges a

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complete denial of effective opportunity of hearing before passing the
assessment order under Section 143(3) dated March 30, 2026. Such
grievance goes to the root of the matter and falls squarely within the
recognized exceptions to the rule of alternate remedy.
43. It is also observed in Tin Box Company vs CIT reported at (2001)
249 ITR 216(SC) that an assessment order passed without a proper
opportunity of hearing cannot be cured or substituted by providing a
hearing at the appellate stage (CITA). A faulty assessment process
must be set aside entirely and remanded.

44. A review of the record reveals that the respondent failed to prove a
meaningful and effective opportunity for the petitioner to present their
case. Denying an effective hearing and bypassing statutory mandates
for personal interaction vitiates the decision making process. The
impugned Assessment Order, having been passed in gross violation of
natural justice, is void ab initio.
45. Likewise, in A.K. Kraipak v. Union of India reported at (1969) 2 SCC
262 , the Supreme Court has observed that the aim of the rules of
natural justice is to secure justice and prevent miscarriage of justice.
46. In the present case, substantial additions have been made in the
assessment order without furnishing adequate opportunity to the
petitioner to explain the discrepancies alleged against him. The record
further discloses that the impugned order has been passed in undue
haste at the fag end of the limitation period. The procedure adopted by
the Assessing Officer reduced the opportunity of hearing to a mere
ritualistic formality rather than a meaningful safeguard.

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47. Once the assessment order is held to be vitiated for breach of natural
justice, the consequential demand raised there under and all
proceedings initiated on the basis thereof necessarily falls flat. The
foundation having been removed, the superstructure erected
thereupon cannot survive.

48. This Court is therefore satisfied that the impugned assessment order
suffers from gross violation of the principles of natural justice and
failure to provide an effective opportunity of hearing. Such violation
goes to the root of the proceedings and renders the assessment order
legally unsustainable.
49. Having heard the parties and upon perusal of the materials on record,
this Court finds substantial merit in the challenge made by the
petitioner to the Assessment Order dated March 30, 2026 passed
under Section 143(3) of the Income Tax Act, 1961 for the Assessment
Year 2024-25.
50. This Court is, therefore, inclined to hold that :
(i) the writ petition is maintainable notwithstanding the
availability of a statutory appellate remedy;
(ii) the assessment order dated March 30,2026 passed under
Section 143(3) for Assessment Year 2024-25 suffers from gross
violation of principles of natural justice and denial of effective
opportunity of hearing;
(iii) the impugned order stands vitiated on account of procedural
unfairness affecting the very decision-making process;

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(iv) consequently, the demand notice and penalty proceedings
arising there from are liable to be quashed.
51. Accordingly, in the light of Tin Box Company (supra) the Assessment
Order dated March 30, 2026, passed under Section 143(3) of the
Income Tax Act, 1961 for Assessment Year 2024-25, the consequential
demand notice and all connected penalty proceedings are hereby
quashed and set aside. The matter is remanded back to the Assessing
Officer for fresh consideration after granting a meaningful opportunity
of personal hearing. The assessing officer shall provide the petitioner
with a specific, reasonable opportunity to file a detailed reply along
with all relevant materials for adjudication.
52. The fresh Assessment Order shall be passed in accordance with law
within a period of eight weeks from the date of this order and shall
communicate the decision so arrived at, to the petitioner immediately
thereafter.
53. It is made clear, that no adjournment shall be prayed for by the
petitioner and the entire assessment proceedings shall be completed
in a time bound manner.
54. With the above observations and directions the writ petition WPO 212
of 2026 along with all connected applications are allowed and
disposed of. There shall, however, be no order as to costs.
55. Since affidavits have not been called for the allegations made in the
writ petition deemed to have been denied and not admitted.

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56. Urgent Photostat certified copy of this order if applied for be supplied
to the parties on priority basis upon compliance of all requisite
formalities.


( Smita Das De, J. )