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2020 (1) TMI 173 - HC - Income TaxAssessment completed in violation of principles of natural justice - Exemption u/s 11 denied - HELD THAT:- There is really no necessity to examine the relevant provisions of law or the merits of the claims of the petitioners since there is a more fundamental aspect of the matter that appeals, the gross violation of the principles of natural justice. Apart from the fact that the two orders of assessment are entirely identical, word to word, except for the differences in the figures in the computation, there is nothing in the order itself to indicate that the petitioners have been put to notice of the proposals for assessment prior to finalization thereof and this aspect of the matter is really not disputed or contested by the revenue. The stand of the Assessing Authority as revealed from a perusal of the impugned orders is that the donations by the two individuals to VRF have been received back by them through MRF by way of a circular transaction which amounts to money laundering. However, such a conclusion has to be arrived at only after soliciting an explanation for the proposed assessment from the petitioners as well as a proper consideration of the explanations furnished as well as materials filed, if any, by the petitioners. Though the provisions of the Income Tax Act do not provide for the issuance of a show cause notice in all cases, in matters such as the present, where the Assessing Authority has formulated a specific issue based upon his understanding of a transaction, it is incumbent upon him to reveal his mind to the assessee, in order that the assessee is put to notice of the proposed basis of assessment and can reply/respond to the same. This not having been done, the impugned orders are set aside. The impugned orders of assessment in both Writ Petitions shall be treated as show cause notices and the petitioners will appear before the Assessing Officer on Tuesday, the 07th January, 2020 at 10.30 a.m. without expecting any further notice in this regard along with a written reply as well as materials in support of their stand, if any. Consciously refrain from adverting to the merits of the impugned assessments in the light of my conclusion that the assessments have been completed in violation of principles of natural justice and all contentions are left open to be appreciated and adjudicated upon de novo and by way of speaking orders. Let this exercise be carried out and completed within a period of six weeks from 07.01.2020.
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