2021 (9) TMI 1489 - HC - Income Tax

Penalty u/s 274 r.w.s. 270A - assessment order itself has been passed in breach of the mandatory requirements u/s 144B - HELD THAT - One of the requirement u/s 144B is to serve upon the assessee a show cause notice alongwith a draft assessment order. In the affidavit in reply filed by one Ambernath Khule, the Jurisdictional AO affirmed on 31st August 2021 on behalf of respondents, in paragraph 5 it is admitted that no specific show cause notice u/s 144B was issued. As provided in Sub-Section 9 of Section 144B of the Act, the assessment order will be non-est. The assessment order which is impugned in the petition is, therefore, quashed and set aside. The consequent demand notice as well as the notice for penalty also are quashed and set aside. It is open to the department to take steps as advised in accordance with law.

Summary

Issues: Impugning assessment order under Income Tax Act for non-compliance with Section 144B requirements.

Analysis:
The petitioners challenged the assessment order dated 22nd April 2021, along with the demand notice under Section 156 of the Income Tax Act and the penalty notice under Section 274 read with Section 270A of the Act. The main ground for challenge was the failure to comply with the mandatory requirements under Section 144B of the Act. Section 144B mandates the service of a show cause notice along with a draft assessment order to the assessee. The affidavit filed by the Jurisdictional Assessing Officer admitted that no specific show cause notice under Section 144B was issued. Consequently, as per Sub-Section 9 of Section 144B, the assessment order was deemed non-est. Therefore, the High Court quashed and set aside the impugned assessment order, demand notice, and penalty notice. The department was directed to take appropriate steps in accordance with the law. The petition was disposed of, and the registry was instructed to file the affidavit in rejoinder for record completion.