2023 (5) TMI 495 - SCH - Income Tax

Validity of assessment u/s 144B - show cause notice with a draft Assessment Order was not issued and served upon the assessee - HELD THAT - As Assessment Order was passed without issuing a show cause notice with a draft Assessment Order, as was mandatorily required, under Section 144B of the Act, as such, it cannot be said that the High Court has committed any error. Considering the fact that the Faceless Assessment Scheme has been introduced recently and therefore, the Revenue ought to have been given some leverage to correct themselves and take corrective measures and therefore the High Court ought to have remanded the matter to the AO to pass a fresh order in accordance with law, after following the due procedure, as required under the law, namely, more particularly, under Section 144B of the Act. We modify the impugned judgment and order passed by the High Court and remand the matter to the Assessment Officer to pass a fresh Assessment Order, after following due procedure, in accordance with law under Section 144B of the Act.

Summary

Issues involved:
The issue involved in this case is the validity of an Assessment Order under Section 144B of the Income Tax Act, 1961, specifically regarding the requirement of issuing a show cause notice with a draft Assessment Order to the assessee.

Judgment Summary:

Issue 1: Validity of Assessment Order under Section 144B
The Supreme Court granted leave to appeal against the High Court's judgment that set aside the Assessment Order for not complying with the mandatory requirement under Section 144B of the Income Tax Act. The Court noted that the show cause notice with a draft Assessment Order was not issued and served upon the assessee, leading to the High Court's decision. The Revenue argued that the High Court should not have entertained the writ petition challenging the assessment order. However, the Court held that the High Court did not commit any error in setting aside the Assessment Order due to the non-compliance with Section 144B. The Court acknowledged the recent introduction of the Faceless Assessment Scheme and emphasized that the Revenue should have been given the opportunity to correct the error. Therefore, the Court modified the High Court's order and remanded the matter to the Assessment Officer to pass a fresh Assessment Order in accordance with the law, particularly under Section 144B of the Act.

Conclusion
The Supreme Court modified the High Court's judgment and remanded the matter to the Assessment Officer for a fresh Assessment Order, ensuring compliance with Section 144B of the Income Tax Act. All contentions and defenses available to the assessee on merits are to be considered by the Assessing Officer in accordance with the law and on its own merits. As a result, the appeal was disposed of by the Court.