Madras HC sets aside Cryptic Tax Assessment Order, Directs Reassessment with Fair Hearing [Read Order]
The Madras High Court quashed a cryptic tax assessment order for violating natural justice and guidelines issued by the Commissioner of State Tax. It warned that officials issuing vague assessments without proper reasoning would face disciplinary action
![Madras HC sets aside Cryptic Tax Assessment Order, Directs Reassessment with Fair Hearing [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/03/Reassessment-Cryptic-Tax-Hearing-taxscan.jpg "Madras HC sets aside Cryptic Tax Assessment Order, Directs Reassessment with Fair Hearing [Read Order]")
In a recent judgment, the Madras High Court set aside a cryptic tax assessment order and directed a reassessment with a fair hearing, highlighting the importance of procedural fairness and natural justice in tax proceedings. The case involved a writ petition filed by K.P. Trading Corporation challenging the assessment order on the grounds that the respondent neither determined the...
In a recent judgment, the Madras High Court set aside a cryptic tax assessment order and directed a reassessment with a fair hearing, highlighting the importance of procedural fairness and natural justice in tax proceedings.
The case involved a writ petition filed by K.P. Trading Corporation challenging the assessment order on the grounds that the respondent neither determined the tax properly and had disregarded the procedural guidelines stipulated by the Commissioner of State Tax, Chennai, in Circular No. 8/2024, dated August 29, 2024.
Export, Expand, Excel – Your Ultimate Guide to SEZ Success! - Click Here
The petitioner's counsel, N. Sudalaimuthu, argued that the respondent incorrectly claimed that the petitioner had not filed a reply. However, he countered that the petitioner had indeed submitted a reply, which the respondent had scanned and added to the order.
Despite acknowledging the reply, the respondent dismissed it, stating that it was not in order and lacked conclusive evidence.
Export, Expand, Excel – Your Ultimate Guide to SEZ Success! - Click Here
The petitioner’s counsel contended that this dismissal was unjustified, as the order failed to provide a proper explanation or reasoning and violates the natural justice principle.
The respondent's counsel, R. Suresh Kumar, Additional Government Pleader, contended that the petitioner had not exhausted all available remedies before filing the writ petition. He argued that the petitioner had the option of filing an appeal, where the same issues could be raised and addressed by the appellate authority. Therefore, he urged the Court not to intervene at this stage and instead direct the petitioner to pursue the alternative remedy of an appeal.
Export, Expand, Excel – Your Ultimate Guide to SEZ Success! - Click Here
Read More: Denial of S.80P Deduction Over Late Filing: ITAT Rules Appeal Infructuous
After hearing both sides, the single bench led by Justice K. Kumaresh Babu ruled that the assessment order was vague and lacked reasoning, failing to determine the tax liability properly. The Court emphasized that tax authorities must issue well-reasoned and transparent orders, especially when taxpayers have responded to notices.
Reinforcing the principles of natural justice, the Court not only set aside the flawed order but also directed the Commissioner of State Tax to issue a new circular warning tax officials against issuing vague assessments. It further stated that in future cases where assessment orders fail to determine tax liability or lack proper reasoning, disciplinary action should be taken against the responsible officer.
Export, Expand, Excel – Your Ultimate Guide to SEZ Success! - Click Here
To Read the full text of the Order CLICK HERE
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
