2021 (8) TMI 1399 - HC - Income Tax

Validity of faceless assessment passed u/s 144B - Denial of natural justice - Petitioner submits that the impugned assessment order has been passed without observing the principles of natural justice inasmuch as due to launch of new income tax e-filing portal the existing portal was discontinued from 01st June 2021 and the new income tax e-filing portal did not work after the launch and therefore compliance till 07th June 2021 could not be made and the impugned assessment order was passed on 11th June 2021 - On 26th July 2021 this Court had issued notice to the Respondents who sought time to obtain instructions and till today - HELD THAT - We are of the view that the Respondents have had more than sufficient time to obtain instructions. Consequently the request for adjournment of respondents is declined. Having perused the paperbook we are of the view that the impugned assessment order has been passed without providing adequate opportunity to submit reply in response to the show cause-cum-draft assessment order dated 23rd May 2021. We also feel that as the timeframe set out in the show cause notice dated 23rd May 2021 was extremely narrow and since the e-filing portal was allegedly dysfunctional there are good enough reasons to set aside the impugned assessment order with liberty to the Assessing Officer to continue the assessment proceedings from the stage at which they were positioned when the show cause notice dated 23rd May 2021 was issued.

Summary

Issues:
Challenge to assessment order and demand notice based on violation of natural justice principles and non-compliance with e-filing portal directives.

Analysis:
The petitioner filed a writ petition challenging the assessment order and demand notice issued by the National Faceless Assessment Centre, Delhi under Section 143(3) read with Section 144B. The petitioner sought a stay on the demand arising from the assessment order. The counsel argued that the assessment order was passed without following the principles of natural justice. The compliance date for the show cause-cum-draft assessment order was 7th June 2021, as per the notification by the Directorate of Income Tax (Systems) and CBDT press release. However, the impugned assessment order was passed on 11th June 2021, which was deemed a violation of the directives.

The counsel further contended that due to the launch of a new income tax e-filing portal, the existing portal was discontinued from 1st June 2021, and the new portal did not function properly post-launch. This technical issue prevented compliance by the stipulated date of 7th June 2021, leading to the issuance of the impugned assessment order on 11th June 2021. The Court had issued notice to the respondents on 26th July 2021, and despite multiple adjournments, the respondents failed to provide satisfactory instructions.

The Court noted that the respondents had ample time to obtain instructions and declined further adjournment requests. Upon reviewing the case, the Court found that the impugned assessment order lacked adequate opportunity for the petitioner to respond to the show cause notice. The narrow timeframe provided in the notice, coupled with the dysfunctional e-filing portal, justified setting aside the assessment order. The Assessing Officer was granted liberty to resume assessment proceedings from the stage when the show cause notice was issued. The Court directed the Revenue to seek additional information if required before framing the Assessment Order, thereby disposing of the writ petition along with pending applications.

Finally, the Court ordered the immediate upload of the judgment on the website and the distribution of a copy to the counsel via email.