2022 (6) TMI 1506 - HC - Income Tax

Validity of assessment order u/s 147 r.w.s. 144B - violation of principles of natural justice - HELD THAT - It is no doubt true that the impugned order is an appealable order and the appellate authority can re-examine the factual position. However, the opportunity which the assessee is entitled to before the original authority can never be replaced to that of the opportunity before the appellate authority. As in the case of Tin Box Company, New Delhi 2001 (2) TMI 13 - SUPREME COURT held that the assessment order made by the ITO without giving a proper opportunity of hearing to the assessee was bad in law. It was held that the possibility of placing of evidence by the assessee before the appellate authorities would be of no use to hold the said order valid. We are of the view that ends of justice would be met if an opportunity is granted to the assessee to go before the AO. For such reason, we are not inclined to quash the assessment order dated 23rd March, 2022, which shall be treated as draft assessment order and the appellants shall be permitted to put in their objections within a period that will be indicated by the AO within a week from the date of receipt of the server copy of this order. After filing of the objections, the AO shall proceed to complete the assessment in terms of the procedure laid down by the National Faceless Assessment Centre. Assuming an appeal had been preferred before the CIT (A), it would not be of any consequence as we have directed the AO to take a fresh decision in the matter.

Summary

Issues: Challenge to assessment order under Income Tax Act based on violation of principles of natural justice.

The High Court of Calcutta heard an intra-Court appeal against an assessment order dated 23rd March, 2022 under sections 147 and 144B of the Income Tax Act, 1961. The appellants contended that they were unable to respond to the show cause notice due to ill health, seeking an opportunity to present their case before the Assessing Officer. The Single Bench held that there was no violation of natural justice, as the assessment order was appealable, dismissing the writ petition. The appellants then appealed this decision. The appellants requested an opportunity to present their case before the Assessing Officer for a fair assessment based on available material. The respondents argued that the writ petition was rightly dismissed, as ample opportunity was provided before the ex-parte assessment order was passed. However, no specific details were provided regarding the stage of the present appeal or the filing of an appeal before the CIT (A).

The Court noted that while the assessment order was appealable, the opportunity before the original authority could not be replaced by an opportunity before the appellate authority. Citing the Tin Box Company case, the Court emphasized that an assessment order made without proper hearing was invalid, and the possibility of presenting evidence before appellate authorities did not cure this defect. In light of the circumstances, the Court decided not to quash the assessment order but treated it as a draft order. The appellants were granted the opportunity to submit objections to the Assessing Officer within a specified period after receiving the order. The Assessing Officer was directed to complete the assessment following the procedures of the National Faceless Assessment Centre.

The Court clarified that even if an appeal had been filed before the CIT (A), it would not impact the fresh decision directed to be taken by the Assessing Officer. Consequently, the Court disposed of the appeal and related application without costs. The parties were to receive an urgent certified copy of the order upon completion of legal formalities.