HC set-aside Faceless assessment order passed without issuing draft assessment order

Toplight Corporate Management (P.) Ltd. Vs National faceless assessment Centre Delhi (Delhi High Court)

Learned counsel for the petitioner states that the impugned assessment order was passed without issuing mandatory draft assessment order along with show cause notice, as contemplated under Section 144B of the Act, resulting in denial of opportunity to the petitioner to submit a response, to place documents on record in support thereof and to be heard before passing the final assessment order.

In our opinion, learned counsel for the petitioner is correct in submitting that Section 144B of the Act has been violated and the assessment proceeding has been completed in the present case in violation of the principles of natural justice.

Consequently, the impugned assessment order dated 11^th June, 2021 issued under Section 143(3) read with Section 144B of the Act along with accompanying notice of demand issued under Section 156 of the Act as well as notice for initiating penalty proceedings issued under Section 270A and 271AAC(I)of the Act are set. However, the respondents/revenue is given liberty to pass a fresh assessment order in accordance with law. The petitioner is also given liberty to challenge any action of the respondents/revenue in accordance with law, in the event it is aggrieved by the same.

FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT

CM APPL 19718/2021

1. Allowed subject to all just

2. Accordingly, the application stands disposed

W.P.(C) 6223/2021

3. The petition has been heard by way of video

4. Present writ petition has been filed challenging the assessment order dated 11^th June, 2021 passed by respondent 1/National Faceless Assessment Centre, Delhi under Section 143(3) read with Section 144B and the accompanying notice of demand issued under Section 156 as well as notice for initiating penalty proceedings under Section 270A and 271AAC(1) of the Income Tax Act, 1961 [for short ‘the Act’] for assessment year 2018-19.

5. Learned counsel for the petitioner states that the impugned assessment order was passed without issuing mandatory draft assessment order along with show cause notice, as contemplated under Section 144B of the Act, resulting in denial of opportunity to the petitioner to submit a response, to place documents on record in support thereof and to be heard before passing the final assessment order.

6. She points out that in a similar case being Smart Vishwas Society National Faceless Assessment Centre Delhi (Earlier National E-Assessment Centre Delhi) & Ors, WP(C) 5348/2021, the learned predecessor Division Bench of this Court had quashed the assessment order and consequential notices.

7. Issue Mr. Puneet Rai, learned senior standing counsel for respondents/revenue accepts notice. Learned senior standing counsel appearing on behalf of respondents/revenue states that the record presently placed before the Court would show that though no show cause notice-cum- draft assessment order was issued, yet several opportunities had been granted by the respondents/revenue to the petitioner, before the said date, to explain its case.

8. This argument of the respondents/revenue is contrary to the statutory scheme, as provided in Section 144B of the The relevant portions of Section 144B xvi (a) and (b) as well as Section 144B(9) of the Act are reproduced hereinbelow:-

“144B. (1) Notwithstanding anything to the contrary contained in any other provisions of  this  Act,  the  assessment  under  sub-section  (3) of section 143 or under section 144, in the cases referred to in sub-section (2), shall be made in a faceless manner as per the following procedure, namely:—………

(xvi) the National Faceless Assessment Centre shall examine the draft assessment order in accordance with the risk management strategy specified by the Board, including by way of an automated examination tool, whereupon it may decide to—

(a) finalise the assessment, in case no variation prejudicial to the interest of assessee is proposed, as per the draft assessment order and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee, along with the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment; or

(b) provide an opportunity to the assessee, in case any variation prejudicial to the interest of assessee is proposed, by serving a notice calling upon him to show cause as to why the proposed variation should not be made; or………

xxx                      xxx                                   xxx

(9) Notwithstanding anything contained in any other provision of this Act, assessment made under sub-section (3) of section 143 or under section 144 in the cases referred to in sub- section (2) [other than the cases transferred under sub-section (8)], on or after the 1st day of April, 2021, shall be non est if such assessment is not made in accordance with the procedure laid down under this section.”

(emphasis supplied)

9. In our opinion, learned counsel for the petitioner is correct in submitting that Section 144B of the Act has been violated and the assessment proceeding has been completed in the present case in violation of the principles of natural justice.

10. Consequently, the impugned assessment order dated 11^th June, 2021 issued under Section 143(3) read with Section 144B of the Act along with accompanying notice of demand issued under Section 156 of the Act as well as notice for initiating penalty proceedings issued under Section 270A and 271AAC(I)of the Act are set. However, the respondents/revenue is given liberty to pass a fresh assessment order in accordance with law. The petitioner is also given liberty to challenge any action of the respondents/revenue in accordance with law, in the event it is aggrieved by the same.

11. Accordingly, the present writ petition along with pending application stands disposed.

12. The order be uploaded on the website Copy of the order be also forwarded to the learned counsel through e-mail.