2021 (6) TMI 335 - HC - Income Tax

Validity of assessment order - faceless assessment - Violation of provisions of Section 144B - no show-cause notice cum draft assessment order was issued, as mandated under Section 144(B) - HELD THAT - As the assertions made in the petition, which are supported by an affidavit, have to be accepted. Revenue, says that the record presently placed before the Court would show that although no show cause notice-cum-draft assessment order was issued, several opportunities were granted by the respondents/revenue, to the petitioner, before the said date, to explain its case.This stand of the respondents/revenue is contrary to the statutory scheme, as engrafted in Section 144B. Therefore, in our opinion, Ms. Kavita Jha, learned counsel for the petitioner, is correct in submitting that the provisions of Section 144B of the Act have been violated. That being the position, there is no option, but to set aside the impugned assessment order dated 15.04.2021, issued under Section 143(3), read with Sections 143(3A) and 143(3B) of the Act, along with accompanying notice of demand, issued under Section 156 of the Act and notice for initiation of penalty proceedings, issued under Section 270A of the Act.

Summary

Issues: Violation of Section 144B of the Income Tax Act, 1961 in assessment order; Setting aside of assessment order dated 15.04.2021; Liberty for fresh assessment order

In this judgment by the Delhi High Court, the petitioner challenged an assessment order dated 15.04.2021 and subsequent orders due to non-issuance of a show-cause notice cum draft assessment order as required by Section 144B of the Income Tax Act, 1961. The court noted that although the respondent/revenue had not filed a counter-affidavit, they claimed to have provided opportunities for the petitioner to explain their case before the assessment order date. The court held this practice to be contrary to the statutory scheme of Section 144B, as argued by the petitioner's counsel. Consequently, the court accepted the petitioner's assertions and set aside the impugned assessment order dated 15.04.2021, along with the accompanying notices of demand and penalty proceedings issued under various sections of the Act. The writ petition and pending application were disposed of accordingly.

Regarding the respondent's request for liberty to pass a fresh assessment order, the court granted this request, stating that if such a step is permissible under the law, there should be no hindrance. However, the court clarified that if any further actions are taken, the petitioner retains the right to pursue appropriate legal remedies available to them. The judgment highlights the importance of adhering to procedural requirements laid down in the Income Tax Act, ensuring fairness and compliance with statutory provisions in assessment proceedings.