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2021 Supreme(Del) 1053
IN THE HIGH COURT OF DELHI AT NEW DELHI
Manmohan, Navin Chawla, JJ.
Akashganga Infraventures India Limited - Appellant
Versus
National Faceless Assessment Centre - Respondent
W.P. (C) No. 5413 of 2021; C.M. No. 16749 of 2021, 18049 of 2021
Decided On : 04-08-2021
Important Points
Subject
Taxation Law - Income Tax Assessment
Act Referred
Headnote
Natural Justice - Faceless Assessment - The court found a violation of principles of natural justice and mandatory procedure prescribed in the Faceless Assessment Scheme under Section 144B of the Income Tax Act, 1961 due to the absence of a prior Show Cause Notice and draft assessment order before passing the impugned assessment order.
Fact of the Case:
The petition challenged the Assessment order, notice of demand, and notice of penalty dated 19th April 2021 under Section 143(3) read with Section 144B, Section 156 and Section 274 read with Section 271AAC(1) of the Income Tax Act, 1961 pertaining to the Assessment Year 2018-19, citing a breach of principles of natural justice.
Finding of the Court:
The court found a violation of principles of natural justice and mandatory procedure prescribed in the Faceless Assessment Scheme under Section 144B of the Act due to the absence of a prior Show Cause Notice and draft assessment order before passing the impugned assessment order. The impugned assessment order, notice of demand, and notice of penalty were set aside, and the matter was remanded back to the Assessing Officer.
Issues: Violation of principles of natural justice and mandatory procedure prescribed in the Faceless Assessment Scheme under Section 144B of the Act.
Ratio Decidendi: The court's decision was influenced by the mandatory provisions of Section 144B (7) and Section 144B (9) of the Income Tax Act, 1961, which require the issuance of a prior Show Cause Notice and draft assessment order before passing the final assessment order under the Faceless Assessment Scheme.
Final Decision: The impugned assessment order, notice of demand, and notice of penalty dated 19th April, 2021 for the Assessment Year 2018-19 were set aside, and the matter was remanded back to the Assessing Officer, who was directed to issue a draft assessment order and thereafter pass a reasoned order in accordance with law.
Prakash Kumar, Advocate, Rashmi Singh, Advocate, Zoheb Hossain, Advocate
JUDGMENT
Manmohan, J. - The petition has been heard by way of video conferencing.
2. Present writ petition has been filed challenging the Assessment order, notice of demand and notice of penalty dated 19th April 2021 passed under Section 143(3) read with Section 144B, Section 156 and Section 274 read with Section 271AAC(1) of the Income Tax Act, 1961 [the Act] pertaining to the Assessment Year 2018-19.
3. Learned counsel for the Petitioner states that there has been a breach of principles of natural justice, inasmuch as the respondent/revenue has failed to issue the mandatory Show Cause Notice-cum-draft assessment order to the petitioner/assessee, prior to passing of the impugned assessment order.
4. Per contra, the counsel for the Respondent-Revenue states that the final Assessment order has been passed without issuance of a formal Show Cause Notice due to program and systemic glitches and he points out that the petitioner has been given ample opportunities and time for furnishing the requisite details and making submissions and hence there was no violation of principles of natural justice.
5. This Court is of the view that Section 144B (7) mandatorily provides for issuance of a prior show cause notice and draft assessment order before issuing the final assessment order. The relevant portion of Section 144B (7) and Section 144B (9) are reproduced hereinbelow: -
"144B. Faceless assessment
(1) xxxx xxxx xxxx
xxxx
(7) For the purposes of faceless assessment
xxxx xxxx xxxx
xxxx
(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;
xxxx xxxx xxxx
(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."
6. Since in the present case no prior Show Cause Notice as well as draft assessment order had been issued before passing the impugned assessment order, there is a blatant violation of principles of natural justice as well as mandatory procedure prescribed in "Faceless Assessment Scheme" and as stipulated in Section 144B of the Act.
7. Keeping in view the aforesaid facts, the impugned assessment order, notice of demand and notice of penalty dated 19th April, 2021 for the Assessment Year 2018-19 are set aside and the matter is remanded back to the Assessing Officer, who shall issue a draft assessment order and thereafter pass a reasoned order in accordance with law.
8. With the aforesaid direction, the present writ petition along with pending application stands disposed of.
9. The order be uploaded on the website forthwith. Copy of the order be also forwarded to the learned counsel through e-mail.
