2021 (4) TMI 1379 - HC - Income Tax

Non adherence to Faceless Assessment Scheme, 2019 provisions - petitioner is aggrieved by the fact that, although, the assessment was carried out under the Faceless Assessment Scheme 2019 framed by the revenue, the provisions of the Scheme have not been adhered to - as argued since there was a variation made to the declared income of the petitioner qua the assessment year 2018-2019, a show-cause notice should have been issued, before finalizing the variation. HELD THAT - A perusal of the impugned assessment order dated 31.03.2021 shows that the petitioner had declared its income, as ₹ 2,00,76,180/-, which, while framing the impugned assessment order was enhanced to ₹ 3,50,79,205/-. Additions have been made by the assessing officer vis-a-vis unsecured loans, and the disallowance made under Section 14A of the Income Tax Act, 1961. Given the foregoing, we are of the view, that at least, at this stage, the petitioner has been able to set up a prima facie case for issuance of notice and grant of an interim order. Accordingly, issue notice to the respondents. Ld. senior standing counsel, accepts service on behalf of the respondents/revenue. A counter-affidavit will be filed within three weeks from today. Rejoinder thereto, if any, will be filed before the next date of hearing. In the meanwhile, the operation of the assessment order dated 31.03.2021 (Annexure P-1) shall remain stayed till the next date of hearing. List the matter on 21.05.2021.

Summary

Issues involved:
1. Alleged breach of principles of natural justice in a Faceless Assessment Scheme.
2. Variation in declared income leading to additions in assessment order.
3. Prima facie case for issuance of notice and grant of an interim order.

Analysis:
1. The petitioner raised concerns regarding the Faceless Assessment Scheme 2019 not being adhered to, alleging a breach of natural justice principles engrafted in the Scheme. Reference was made to the Faceless Assessment (1st Amendment) Scheme, 2021, highlighting specific provisions requiring a show-cause notice before finalizing variations in declared income for the assessment year 2018-2019.

2. The impugned assessment order dated 31.03.2021 revealed an increase in the petitioner's declared income from ?2,00,76,180 to ?3,50,79,205. The additions were related to unsecured loans and disallowances under Section 14A of the Income Tax Act, 1961. The court acknowledged the petitioner's prima facie case for the issuance of notice and the grant of an interim order based on the variations made.

3. Consequently, the court directed the issuance of notice to the respondents, with the senior standing counsel for revenue accepting service on their behalf. A counter-affidavit was to be filed within three weeks, with a provision for rejoinder before the next hearing date. The operation of the assessment order was stayed until the next hearing scheduled for 21.05.2021, recognizing the need for further examination and resolution of the issues raised by the petitioner regarding the assessment discrepancies.