2021 (7) TMI 962 - HC - Income Tax

Validity of assessment order - faceless assessment - Violation of provisions of Section 144B - initiating penalty proceedings under Section 270A and 271AAC(1) - HELD THAT - Petitioner is correct in submitting that Section 144B of the Act has been violated and the assessment proceeding has been completed in the present case in violation of the principles of natural justice. Consequently, the impugned assessment order dated 11th June, 2021 issued u/s 143(3) read with Section 144B of the Act along with accompanying notice of demand issued u/s 156 of the Act as well as notice for initiating penalty proceedings issued under Section 270A and 271AAC(I)of the Act are set aside - the respondents/revenue is given liberty to pass a fresh assessment order in accordance with law. The petitioner is also given liberty to challenge any action of the respondents/revenue in accordance with law, in the event it is aggrieved by the same.

Summary

Issues:
Challenging assessment order under Income Tax Act, 1961 for assessment year 2018-19 based on violation of Section 144B procedures.

Analysis:
The petitioner challenged the assessment order dated 11th June, 2021, passed by the National Faceless Assessment Centre, Delhi, under Section 143(3) read with Section 144B of the Income Tax Act, 1961. The petitioner contended that the assessment order was issued without following the mandatory procedure of issuing a draft assessment order along with a show cause notice, as required under Section 144B of the Act. The petitioner argued that this denial of opportunity to respond, submit documents, and be heard before the final assessment order was a violation of natural justice principles.

In response, the respondents/revenue claimed that although no show cause notice-cum-draft assessment order was issued, the petitioner was given multiple opportunities to present their case before the assessment order date. However, the Court found this argument to be contrary to the statutory scheme outlined in Section 144B of the Act. The relevant provisions of Section 144B were cited, emphasizing the requirement for following the specified procedure for faceless assessments.

The Court agreed with the petitioner's argument, stating that Section 144B of the Act was indeed violated in this case, and the assessment proceeding was completed without adhering to the principles of natural justice. Consequently, the Court set aside the impugned assessment order, notice of demand, and penalty proceedings notices. The respondents/revenue were granted the liberty to pass a fresh assessment order in compliance with the law, and the petitioner was given the liberty to challenge any future actions by the respondents/revenue if aggrieved.

In conclusion, the Court disposed of the writ petition and pending application, directing the order to be uploaded on the website and forwarded to the respective counsels via email. The judgment highlighted the importance of following procedural requirements, especially in faceless assessments, to ensure fairness and adherence to legal principles.