2022 (7) TMI 906 - HC - Income Tax

Validly of faceless Assessment Scheme - Penalty proceedings u/s 270A - non considering replies preferred by the Petitioner - HELD THAT - As this Court is of the view that as per Section 144B(1) (xxiv) of the Act, the assessment order is to be passed only after considering the reply of the assessee. Since in the present case, the replies preferred by the Petitioner, though on record, were not considered before passing the impugned assessment order, there is a violation of the mandatory procedure prescribed in Faceless Assessment Scheme and stipulated in Section 144B of the Act. Keeping in view of law, the impugned assessment order dated 19th April, 2021 as well as the notice of demand and penalty proceedings for the Assessment Year 2018-19 are set aside and the matter is remanded back to the Assessing Officer, who shall consider the replies/objections of the Petitioner and thereafter pass a reasoned order.

Summary

Issues:
Challenge to assessment order, demand notice, and penalty proceedings under Section 270A of Income Tax Act, 1961 for Assessment Year 2018-19.

Analysis:
The petitioner filed a writ petition challenging the assessment order, demand notice, and penalty proceedings initiated by the Respondent under Section 270A of the Income Tax Act, 1961 for the Assessment Year 2018-19. The petitioner contended that the assessment order was passed without considering the reply/objections filed by them to the show cause notice-cum-draft assessment order. The petitioner sought an adjournment to file a response up to 15th April 2021, but the final assessment order was passed on 19th April 2021 without considering their submissions. The petitioner presented evidence of filing replies/objections through Annexure P-11, which showed that they filed their response before the extended compliance date requested by them.

The petitioner also highlighted that the Central Board of Direct Taxes (CBDT) had extended the date for passing assessment or reassessment orders under the Income Tax Act to 30th April 2021. On the other hand, the Respondent argued that the petitioner was given a shorter time frame due to non-compliance with notices issued under Sections 142(1) and 143(2) of the Act. However, the Court noted that as per Section 144B(1) (xxiv) of the Act, the assessment order should be passed only after considering the reply of the assessee. In this case, the replies filed by the petitioner were on record but not considered before passing the assessment order, leading to a violation of the mandatory procedure prescribed in the "Faceless Assessment Scheme" and Section 144B of the Act.

Based on the above analysis, the Court set aside the impugned assessment order dated 19th April 2021, along with the notice of demand and penalty proceedings for the Assessment Year 2018-19. The matter was remanded back to the Assessing Officer, directing them to consider the replies/objections of the petitioner and pass a reasoned order in accordance with the law within eight weeks. Consequently, the writ petition, along with any pending application, was disposed of in light of the Court's directions.