Non-consideration of assessee’s reply vitiates Section 148A(d) order for violating natural justice.

The Petitioner, a registered company, filed its original and revised income tax returns for the Assessment Year 2018-19

On 09.03.2022, the Respondent issued a Show-cause Notice under Section 148A(b) of the Income Tax Act, 1961, alleging mis-statement

The Petitioner submitted an initial response on 21.03.2022 and a subsequent detailed reply on 24.03.2022, supported by 225 pages of documentation, including purchase registers and GST records, to refute the allegations

Notwithstanding these submissions, the Respondent passed an order under Section 148A(d) on 30.03.2022 and issued a Notice under Section 148 on 31.03.2022

The Petitioner challenged these actions on the grounds that its replies were ignored and no personal hearing was granted

1. Whether the order passed under Section 148A(d) and the subsequent notice under Section 148 are legally sustainable when the Assessing Officer fails to consider the assessee's reply submitted under Section 148A(c)

2. Whether the failure to provide an opportunity for a personal hearing and the non-consideration of filed objections constitute a breach of the principles of natural justice

Section 148A of the Income Tax Act, 1961, which mandates that the Assessing Officer must consider the reply of the assessee furnished in response to a show-cause notice before deciding whether it is a fit case to issue a notice under Section 148

fundamental Principles of Natural Justice, specifically the requirement of a fair hearing and the duty to pass a reasoned order after considering the materials on record

The Petitioner argued that the impugned order lacked validity because the Respondent failed to evaluate the comprehensive evidence submitted on 24.03.2022, which detailed the entire transaction chain from manufacturing to retail sales

During the proceedings, the Senior Standing Counsel for the Revenue conceded that the Petitioner’s reply had not been considered by the department

The Court observed that Section 148A(d) explicitly requires the consideration of the assessee's reply filed under Section 148A(c)

Since the Respondent admitted to the oversight, the Court found a "clear breach of principles of natural justice" and a departure from settled legal principles

The Court emphasized that a de novo adjudication was necessary to correct this procedural infirmity

The matter was remanded to the Assessing Officer to decide the issue afresh after considering the Petitioner's detailed reply and providing an opportunity for a personal hearing

The Court directed that this exercise be completed within 12 weeks from the date of receipt of the order