2021 (11) TMI 857 - HC - Income Tax

Validity of Assessment order passed by the National Faceless Assessment Centre - as argued the impugned order passed without appropriate Risk Management Strategy of the Board is contemplated under Section 144 (B) (1) (xvi) - HELD THAT - Section 144 (B) of the Income Tax Act, 1961 was inserted with effect from 01.04.2021. As a matter of act the aforesaid provision contemplates that National Faceless Assessment Centre to examine the draft assessment order in accordance with the Risk Management Strategy specified by the Board. The Counsel for respondents was unable to confirm whether any Risk Management Strategy has been specified by the Board. How assessment orders have been passed by the respondents in terms of the aforesaid provisions. The writ petitioner is, therefore, directed to file a statutory appeal in terms of the above provisions within a period of 30 days from the date of receipt of this order. Considering the fact that the impugned order passed without appropriate Risk Management Strategy of the Board is contemplated under Section 144 (B) (1) (xvi) the Appellate Commissioner may consider the appeal of the writ petitioner, if such appeal is filed on merits and in accordance with law. The mandatory requirement a pre deposit under Section 220 (6) shall however, be waived in the light of the fact that the entire assessment proceedings was complete by the respondents at the fag end of the limitation to avoid lapsing of on account of limitation. The Appellate Commissioner is, therefore, directed to pass appropriate orders on merits.

Summary

Issues:
Challenge to assessment order passed by National Faceless Assessment Centre for assessment year 2019/20, Violation of principles of natural justice in passing assessment order, Compliance with statutory safeguards under Section 144 (B) (1) (xvi), Passing of assessment order at the fag end of the limitation period, Existence of Risk Management Strategy specified by the Board, Availability of alternative remedy under Section 246 (A) of the Income Tax Act, 1961.

Analysis:

1. Challenge to Assessment Order: The petitioner challenged the assessment order passed by the National Faceless Assessment Centre for the assessment year 2019/20. The petitioner contended that the major dispute pertained to the addition of stock, and the assessment order was passed without considering this issue, leading to a violation of principles of natural justice as it was passed on the same day as the hearing.

2. Violation of Principles of Natural Justice: The petitioner argued that the assessment order was passed hastily at the fag end of the limitation period to ensure timely completion without due consideration of the petitioner's submissions. The petitioner claimed that the respondents had confirmed the proposals in the show cause notice and adopted the draft assessment order, indicating a lack of fair consideration.

3. Compliance with Statutory Safeguards: The petitioner contended that the statutory safeguards under Section 144 (B) (1) (xvi) were not satisfied as the Risk Management Strategy specified by the Board was not provided. The absence of a Risk Management Strategy was highlighted as a ground for quashing the assessment order.

4. Existence of Risk Management Strategy: The petitioner argued that the Risk Management Strategy specified by the Board was a mandatory requirement for passing assessment orders by the National Faceless Assessment Centre. The petitioner claimed that without a specified Risk Management Strategy, the assessment order should be quashed.

5. Passing of Assessment Order at the Fag End of Limitation: The petitioner raised concerns about the timing of the assessment order, which was passed at the fag end of the limitation period. The petitioner alleged a violation of principles of natural justice due to the rushed completion of the assessment process.

6. Alternative Remedy under Section 246 (A): The court noted that the petitioner had an alternative and efficacious remedy under Section 246 (A) of the Income Tax Act, 1961 by filing an appeal before the Appellate Commissioner. Considering this alternative remedy, the court stated that the challenge to the assessment order could not be entertained.

7. Directive for Statutory Appeal: The court directed the petitioner to file a statutory appeal within 30 days from the date of receipt of the order, emphasizing the importance of complying with the provisions of Section 144 (B) regarding Risk Management Strategy. The court waived the pre-deposit requirement under Section 220 (6) due to the circumstances of the case and instructed the Appellate Commissioner to decide on the appeal within three months.

8. Conclusion: The writ petition was disposed of with the directive for the petitioner to file a statutory appeal within the specified timeline. The court emphasized the importance of complying with statutory provisions and ensuring a fair consideration of the petitioner's case by the Appellate Commissioner. No costs were awarded in the matter.