2021 (9) TMI 1488 - HC - Income Tax

Penalty notices issued u/s 270 A and 271 AAC (1) - Respondent did not comply with the mandatory requirement prescribed u/s 144 B (1) (xvi) (b) - HELD THAT - Admittedly, there has been a variation prejudicial to the interest of assessee. In the affidavit in reply to the Petition, at paragraph 7, it is stated I say that the communication of the Draft assessment order to the assessee, however, is currently not being reflected in the case history visible to the Jurisdiction Assessing Officer. Revenue stated that he has subsequently received instructions that the draft assessment order was not communicated to the assessee. Therefore, we have no option but to set aside the impugned assessment order, the consequential notice of demand and penalty notices as the order, as provided under Sub section (9) of Section 144 B is non est. Concerned officer may take such further steps as advised in accordance with law. Petition disposed of. Respondent is handing over a cheque to Mr. Dalal in compliance with the order dated 23rd August, 2020. Statement is accepted.

Summary

Issues:
Impugning assessment order under Section 143 (3) and Section 144 B
Non-compliance with mandatory requirement under Section 144 B (1) (xvi) (b)
Variation prejudicial to the interest of assessee
Communication of draft assessment order to assessee
Setting aside impugned assessment order, notice of demand, and penalty notices
Further steps to be taken by concerned officer

Analysis:
The petitioner challenged the assessment order dated 18th May 2021 passed under Section 143 (3) and Section 144 B of the Income Tax Act, 1961, along with the notice of demand and penalty notices issued on the ground of non-compliance with the mandatory requirement under Section 144 B (1) (xvi) (b). The relevant provision mandates providing an opportunity to the assessee in case any prejudicial variation is proposed. The affidavit revealed that the draft assessment order was not communicated to the assessee, which is crucial for due process and fairness in assessment proceedings.

The counsel for Revenue acknowledged the failure to communicate the draft assessment order to the assessee, leading to a variation prejudicial to the assessee's interest. Consequently, the court decided to set aside the impugned assessment order, notice of demand, and penalty notices, declaring the order as non est under Sub section (9) of Section 144 B. This decision was made to uphold the principles of natural justice and procedural fairness in tax assessments.

Following the decision to set aside the impugned orders, the court directed the concerned officer to take further steps as advised in accordance with the law. This step ensures that the assessment process is conducted correctly and in compliance with the statutory provisions to safeguard the rights of the assessee and maintain the integrity of the assessment system.

The petition was disposed of based on the above findings and actions taken by the court. Additionally, it was noted that the respondent was complying with a previous order by handing over a cheque, indicating a willingness to adhere to the court's directives. This compliance further reflects the importance of upholding court orders and maintaining transparency and accountability in legal proceedings.