2021 (10) TMI 1407 - HC - Income Tax

Validity of assessment u/s 144B - Assessment Order has been passed without following principles of natural justice and without even issuing a show-cause notice with a draft Assessment Order as mandatorily required u/s 144B - HELD THAT - Respondents have filed an Affidavit of one Deputy Commissioner as affirmed that from the assessment order it appears that there was no show cause that was issued to the petitioner and unable to state as to why the faceless assessment centre has not issued a draft assessment order. In view of this candid admission by Respondents the impugned order dated 23/06/2021 is hereby quashed and set aside. The consequential notice of demand dated 23/06/2021 as well as show-cause notice dated 23/06/2021 issued under Section 274 read with 270A of the Income Tax Act 1961 are also quashed and set aside. The Respondents may take such steps as advised in accordance with law.

Summary

Issues: Impugning Assessment Order for lack of natural justice and show-cause notice compliance under Section 144B of the Income Tax Act, 1961.

Analysis:
1. The Petitioner challenged an Assessment Order dated 23/06/2021 and the related notices of demand, alleging a violation of natural justice principles and the absence of a show-cause notice with a draft Assessment Order as mandated by Section 144B of the Income Tax Act, 1961.

2. The Respondents submitted an Affidavit by a Deputy Commissioner, acknowledging the absence of a show-cause notice in the assessment order and expressing uncertainty about the failure to issue a draft assessment order by the faceless assessment center.

3. The Court, noting the Respondents' admission, quashed the impugned order dated 23/06/2021 along with the consequential notice of demand and show-cause notice issued under Section 274 read with 270A of the Income Tax Act, 1961. The Respondents were directed to take appropriate actions as per legal advice.

4. Importantly, the Court clarified that it refrained from making any observations on the merits of the case, focusing solely on the procedural irregularities raised by the Petitioner.

5. Finally, the Petition was disposed of without any cost implications, signifying a resolution solely based on the procedural lapses identified in the Assessment Order and related notices.