Point of Law: Taxation - Faceless assessment - Section 144B(7) of Act mandatorily provides for issuance of a prior show cause notice and draft Assessment Order before issuing final Assessment Order.

JUDGMENT :

MANMOHAN, J.

1. The present writ petition has been filed challenging the assessment order dated 13th May, 2021 under Section 144 read with Section 254 of the Income Tax Act (hereinafter referred to as the ‘Act’) and the accompanying notice of demand under Section 156 of the Act and notices of initiation of penalty proceedings under Section 271(1) (b) and 271(1)(c), in the case of the petitioner for the Assessment Year 1995-96.

2. Learned counsel for the petitioner submits that the Impugned Order and the accompanying notice issued by the respondents are patently illegal, bad in law, issued without application of mind and the same are against the principles of natural justice.

3. Learned counsel for the petitioner submits that the Impugned Assessment order has been finalized without issuing prior notice as well as draft Assessment Order and without affording an opportunity of being heard to the petitioner as well as without considering the adjournment application/letter filed by the petitioner. She also emphasizes that the Chartered Accountant and his entire family were suffering from Covid-19 pandemic during the relevant time and therefore, the petitioner did not have adequate opportunity to file his response.

4. On the last date of hearing, Mr. Puneet Rai, learned senior Standing Counsel had taken time to obtain instructions. He states that the jurisdictional assessing officer has not been able to access the petitioner’s portal and therefore, he is not in a position to state as to whether the draft Assessment Order had been issued to the petitioner or not. He however, does not deny that opportunity of hearing was not granted to the petitioner.

5. Having heard the learned counsel for the parties, this Court is of the view that Section 144B(7) of the Act mandatorily provides for issuance of a prior show cause notice and draft Assessment Order before issuing the final Assessment Order. The said Section also provides for an opportunity of personal hearing, if requested, by the assessee. The relevant portions of Section 144B (7) and (9) are reproduced herein-below:

“144B. Faceless assessment:

(1) xxx xxx xxx

(7) For the purposes of faceless assessment:

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(vii) in a case where a variation is proposed in the draft assessment order or final draft assessment order or revised draft assessment order, and an opportunity is provided to the assessee by serving a notice calling upon him to show-cause as to why the assessment should not be completed as per the such draft or final draft or revised draft assessment order, the assessee or his authorised representative, as the case may be, may request for personal hearing so as to make his oral submissions or present his case before the income-tax authority in any unit.

(viii) the Chief Commissioner or the Director General, in charge of the Regional Faceless Assessment Centre, under which the concerned unit is set up, may approve the request for personal hearing referred to in clause (vii) if he is of the opinion that the request is covered by the circumstances referred to in sub-clause (h) of clause (xii).

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(xii) the Principal Chief Commissioner or the Principal Director General, in charge of the National Faceless Assessment Centre shall, with the prior approval of the Board, lay down the standards, procedures and processes for effective functioning of the National Faceless Assessment Centre, Regional Faceless Assessment Centres and the unit set up, in an automated and mechanised environment, including format, mode, procedure and processes in respect of the following, namely:

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(h) circumstances in which personal hearing referred to clause (viii) shall be approved:

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(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 n