2021 (12) TMI 1034 - HC - Income Tax

Legality and validity of the assessment order passed by the National e-Assessment Centre, Delhi u/s 143(3) r.w.s.143(3A) and 143(3B) - inadvertent mistake in entering the code number, which was sought to be rectified by the petitioner - HELD THAT - Since the return of the petitioner was taken up for complete scrutiny assessment through the National e-Assessment Centre, Delhi, before completion of the assessment proceedings, the rectification petition filed by the petitioner under Section 154 of the Act ought to have been taken into consideration. Failure to do so has vitiated the impugned assessment order dated 17.03.2021. That being the position, we set aside the assessment order dated 17.03.2021 and remand the matter back to respondent No.1 for passing a fresh assessment order after giving effect to the rectification petition filed by the petitioner on 17.01.2020. While doing so, respondent No.1 shall also take into consideration the response filed by the petitioner on 17.03.2021 in reply to the show cause notice and draft assessment order.

Summary

Issues:
Assessment order validity challenged under Article 226 of the Constitution for assessment year 2018-19 due to discrepancies in return filing and rectification petition not considered.

Analysis:
The petitioner challenged the assessment order dated 17.03.2021 passed by the National e-Assessment Centre under Section 143(3) of the Income Tax Act, 1961 for the assessment year 2018-19. The assessed income was determined at a higher amount due to discrepancies in the return filing. The petitioner had mistakenly filled the wrong code and business nature in the return, which was later rectified through a Section 154 application. However, the assessment was completed without considering this rectification application, leading to a higher tax liability for the petitioner.

The petitioner contended that the assessment should have considered the rectification petition filed under Section 154 of the Act, which would have corrected the inadvertent mistake in the return filing. The failure to consider this rectification application caused prejudice to the petitioner. The respondent, on the other hand, claimed that there was no pending application under Section 154 and the petitioner had not mentioned it either.

After hearing both parties, the court held that the assessment order was flawed as it did not take into account the rectification petition filed by the petitioner. The court set aside the assessment order dated 17.03.2021 and remanded the matter back to the National e-Assessment Centre for a fresh assessment order. The court directed the respondent to consider the rectification petition filed by the petitioner and also take into account the response submitted by the petitioner in reply to the show cause notice and draft assessment order.

In conclusion, the court disposed of the writ petition by setting aside the assessment order and ordering a fresh assessment considering the rectification petition and petitioner's response. No costs were awarded, and any pending miscellaneous applications were closed.