2021 (10) TMI 1274 - HC - Income Tax

Validity of National Faceless Assessment order u/s 143 (3) r.w.s.144B - Non communicating to the Petitioner any draft order - HELD THAT - As in the present case the impugned assessment order was passed without communicating to the Petitioner any draft order of assessment under Section 144B of the IT Act. This Court sets aside the impugned order of assessment of the NFAC as well as all consequential notices/orders. The Court nevertheless grants liberty to the Department to pass a fresh assessment order for the AY 2017-18 after complying with the requirement of the law by giving the Petitioner a personal hearing at a date and time, which should be communicated to the Petitioner sufficiently in advance. It is needless to say that the Petitioner assessee will cooperate in the fresh assessment proceedings and furnish all the documents and information as are available with it relevant to the proceedings.

Summary

Issues: Challenge to assessment order under Section 143 (3) read with Section 144B of the Income Tax Act, 1961 for AY 2017-18.

Analysis:
1. The petitioner challenged an assessment order dated 8th September, 2021, passed by the National Faceless Assessment Centre, Delhi, for the Assessment Year 2017-18. The main contention raised was the non-compliance with the mandatory requirement under Section 144B of the Income Tax Act, 1961, which necessitates the communication of a draft assessment order and a show-cause notice to the petitioner before the final assessment order is passed.

2. The petitioner's counsel referred to judgments of the Delhi High Court and the Orissa High Court in similar cases, emphasizing the importance of complying with the procedural requirements outlined in Section 144B of the Act. It was pointed out that in the present case, the impugned assessment order was issued without providing the petitioner with a draft assessment order as mandated by law.

3. Based on the legal precedents cited and the clear violation of the procedural requirement under Section 144B, the Court set aside the impugned assessment order and all consequential notices/orders. However, the Department was granted liberty to conduct a fresh assessment for the AY 2017-18, provided that the petitioner is given a personal hearing in advance. The petitioner was instructed to cooperate and provide all necessary documents and information for the fresh assessment proceedings.

4. The writ petition was disposed of with the above directions, highlighting the importance of adhering to procedural requirements and ensuring a fair opportunity for the petitioner to present their case during the assessment process.