The assessment order was invalid due to non-compliance with procedural requirements under Section 144B of the Income Tax Act, breaching principles of natural justice.

JUDGMENT :

Advait M. Sethna, J.

1. Rule returnable forthwith. Respondents waive service. By consent of parties, heard finally.

2. As the issues and reliefs involved in both the petitions are identical, with consent of learned counsels for the parties, we dispose of these petitions by this common order, taking Writ Petition No. 3430 of 2022 as the lead petition.

3. This petition is filed under Article 226 of the Constitution of India. The petitioner is primarily aggrieved by the order dated 29 March 2022 passed by the Assessing Officer, National Faceless Assessment Centre, New Delhi (“NFAC” for short) under Section 147 read with Section 144 and 144B of the Income Tax Act, 1961 (“IT Act” for short) and consequential demand notice dated 30 March 2022 issued under section 156 of the IT Act (“Impugned Demand notice” for short). The substantive prayers read thus:-

“(a) Declare that the Impugned Order and Demand Notice dated 29 March 2022 (Exhibit A) are illegal, arbitrary, in breach of natural justice, and liable to be quashed and/or set aside;

(b) Issue a Writ of Certiorari, or a writ in the nature of Certiorari, or any other appropriate Writ, order or direction under Articles 226 and 227 of the Constitution of India quashing the Impugned Order and Demand Notice dated 30 March 2022 (Exhibit A);”

Issue before the Court:-

4. The basic issue for consideration revolves around the legality and validity of impugned assessment order dated 29 March 2022 read with the impugned demand notice which according to the petitioner is in violation of mandatory unamended provisions under Section 144B, read with the first proviso to Section 147 of the IT Act rendering such assessment, ex facie without jurisdiction and a nullity in law.

Factual Matrix:-

5. The relevant facts necessary for adjudication of the present proceedings are :-

6. The petitioner is an individual. The assessment year in question is A.Y. 2014-2015. Respondent no.1 is the National Faceless Assessment Centre through the assessing officer which has passed the impugned assessment order dated 29 March 2022. Respondent no.2 is the jurisdictional assessing officer who issued the notice under section 148 of the IT Act to the petitioner for A.Y. 2014-15. Respondent no.3 is the Principle Commissioner having administrative supervision over petitioner’s assessment and is also the sanctioning authority for issuance of the notice under Section 148 of the IT Act.

7. Respondent no. 2 issued a notice under Section 148 of the IT Act dated 23 March 2021 to the petitioner for AY 2014-15, recording that there were reasons to believe that the income of the petitioner chargeable to tax for AY 2014-15, had escaped assessment which justified reopening under Section 147 of the IT Act. The petitioner filed her return of income dated 29 April 2021, in response to the notice issued under Section 148 of the IT Act, which was duly acknowledged by the respondent no.2.

8. Respondent no. 2 thereafter issued a notice dated 9 December 2021 under Section 143(2) read with Section 147 of the IT Act to the petitioner supplying reasons for reopening of her assessment. The notice stated that the petitioner had not filed her return of income for the AY 2014-15, but had entered into financial transactions amounting to Rs. 11,61,22,771/-, the source of which was not explained. On such basis, the assessment of the petitioner was sought to be reopened. The return of income of the petitioner for the said assessment year was not filed. However, the petitioner had paid advance tax as reflected in the Form 26AS filed by the petitioner for the AY2014-15.

9. Respondent no. 1, NFAC, issued notices to the petitioner under Section 142(1) of the IT Act for the AY 2014-15 dated 28 December 2021 and 8 January 2022, respectively. Respondent no. 1 through such notices sought details from the petitioner in respect of the amount of Rs. 11,61,22,771/- (11.61 Crores approx.) which according to the respondents had escaped assessment for AY 2014-15.

10. The pe