DCIT Vs Abacus Real Estate Private Limited (Supreme Court of India)
The Revenue challenged the Bombay High Court judgment that had set aside an assessment order passed under the faceless assessment scheme on the ground that the mandatory procedure prescribed under Section 144B of the Income-tax Act, 1961 had not been followed. The High Court had held that the assessment order was non est because the assessee had not been issued or served with a show-cause notice along with a draft assessment order before the final assessment was made.
Before the High Court, the assessee had challenged the assessment order, demand notice, and penalty notice dated 19.04.2021 for Assessment Year 2018-19, contending that although notices under Sections 143(2) and 142(1) had been received and responded to, no show-cause notice with a draft assessment order had been issued despite the proposed variations being prejudicial to the assessee. The assessment order itself did not mention issuance of any such notice.
The Revenue relied on an affidavit stating that a draft assessment order had been issued on 12.04.2021 by the Regional E-Assessment Unit. The High Court declined to accept this explanation, observing that the assessment order contained no reference to any draft assessment order, no evidence of its service had been produced, and Section 144B(5) required all communications in a faceless assessment to originate through the National Faceless Assessment Centre (NFAC). The Court also noted that the affidavit had not been filed by the officer who had passed the assessment order. Holding that Section 144B prescribed a mandatory procedure and that non-compliance rendered the assessment non est, the High Court quashed the assessment order, demand notice, and penalty notice while leaving it open to the Revenue to proceed afresh in accordance with law. It also clarified that no observations had been made on the merits of the assessment.
