2021 (5) TMI 736 - HC - Income Tax

Assessment passed u/s 143(3) read with Sections 143(3A) and 143(3B) - faceless assessment scheme - HELD THAT - Prior to passing of the impugned order, the faceless assessment scheme requires that a show cause notice be issued to the concerned assessee accompanied by a draft assessment order setting out the additions proposed to be made. The assessee in question is given an opportunity to either accept the proposed modifications or to object to the same or to request a personal hearing in order to put forth its submissions to present its case, after filing of the written reply. No doubt, in this case, such show cause notice along with a draft assessment order has been issued on 12.04.2021. However, the time extended to the assessee to avail of the options under the draft assessment order is insufficient, insofar as the petitioner has been called upon to avail one of the options set forth, by 14.04.2021. The show cause notice and the accompanying draft assessment order have been received by the petitioner by e-mail on 13.04.2021. Thus 24 hours is available to the petitioner to comply with the same. In the light of the apparent violation of the principles of natural justice, the impugned order is set aside. The petitioner will comply with the directions in notice dated 12.04.2021 and intimate the Assessing Officer accordingly within a period of three (3) weeks from today. The respondents will facilitate receipt of such reply by the petitioner by enabling the portal to receive the objections.

Summary

Issues: Violation of principles of natural justice in an income tax assessment order under Section 143(3) read with Sections 143(3A) and 143(3B) of the Income Tax Act, 1961.

The judgment delivered by the High Court addressed the violation of natural justice principles in an income tax assessment order. The impugned order, dated 15.04.2021, was challenged primarily on the grounds of this violation. The faceless assessment scheme mandates issuing a show cause notice to the assessee along with a draft assessment order, allowing the assessee to accept, object, or request a personal hearing. In this case, the notice and draft order were issued on 12.04.2021, with the petitioner given until 14.04.2021 to respond, providing only 24 hours for compliance after receiving the documents via email on 13.04.2021.

The Court found the time provided for compliance to be insufficient, constituting a violation of natural justice principles. Consequently, the impugned order was set aside. The petitioner was directed to comply with the directions in the notice dated 12.04.2021 within three weeks and inform the Assessing Officer accordingly. The respondents were instructed to facilitate the receipt of objections and enable the portal for submission. The Assessing Authority was directed to hear the petitioner, proceed with the assessment, and complete it in accordance with the law.

In conclusion, the Writ Petition was disposed of with no costs imposed, and the connected Miscellaneous Petition was closed. The judgment highlighted the importance of adhering to natural justice principles in income tax assessments under the specified sections of the Income Tax Act, ensuring fairness and procedural correctness in the assessment process.