Demand Order Quashed; Matter Remanded for Consideration of Assessee’s Reply

 Demand Order Quashed; Matter Remanded for Consideration of Assessee’s Reply

Issue: Whether a demand order is valid when the assessing authority fails to consider the assessee’s reply to the show cause notice.

Facts:

• The assessee, engaged in event management services, received a notice in DRC-01 with a personal hearing due to discrepancies found during scrutiny of returns.
• The assessee submitted a reply to the show cause notice, which was duly acknowledged.
• However, the impugned order was passed on the basis that the assessee had not submitted any reply.

Decision:

• The court held that since the impugned order was passed overlooking the fact that the assessee had filed a reply to the show cause notice, the respondent authority was directed to consider the assessee’s reply.
• The court directed the respondent authority to pass orders afresh after affording the assessee a reasonable opportunity of hearing.

Key Takeaways:

• Importance of Considering Reply: Assessing authorities are obligated to consider the assessee’s reply to a show cause notice.
• Violation of Natural Justice: Failure to consider the assessee’s reply constitutes a violation of the principles of natural justice.
• Remand for Fresh Consideration: When an order is passed without considering the assessee’s reply, the matter should be remanded for fresh consideration.
• Opportunity of Hearing: The assessee must be given a reasonable opportunity of hearing to present their case.
• This decision reinforces the importance of procedural fairness and ensures that assessees are not penalized for errors made by the assessing authorities.