2023 (10) TMI 1462 - HC - Income Tax

Validity of assessment order passed u/s 147 r.w.s 144/144B - as argued no notice was issued prior to passing the assessment order - Petitioner s case that notice was not sent even to the updated email id - HELD THAT - Since the assessment order makes an addition of a large sum in our view Petitioner should have been given an opportunity to explain by serving the notice upon Petitioner. If email id was not available in the portal it should have been served physically upon Petitioner at least by courier or speed post and acknowledgment filed. There have been SOPs in place and the last one which is in force before the assessment order was passed is dated 23rd November 2020. After the assessment order was passed a fresh/revised SOP has been released on 3rd August 2022 for assessment units under the Faceless Assessment provisions of Section 144B of the Act. We would direct Respondents to strictly comply with the SOP dated 3rd August 2022 in all cases not just restricted to Faceless Assessment Proceedings under Section 144B of the Act so that assessees get a reasonable opportunity to make out their case before the AO. Accordingly we hereby quash and set aside the assessment order and remanded for de novo consideration. Within two weeks of the portal being opened Petitioner shall respond to the notice dated 24th November 2021 received under Section 142(1). AO shall pass further orders in the matter as he deems fit in accordance with law after giving a personal hearing to Petitioner notice whereof shall be communicated at least five working days in advance.

Summary

Issues:
Impugning assessment order under Section 147 for lack of notice issuance.

Analysis:
The petitioner challenged an assessment order passed under Section 147 of the Income Tax Act, 1961, primarily on the ground that no notice was issued before the assessment order was passed. The petitioner claimed that no notice was sent, even to the updated email ID. The respondents argued that the assessment proceedings were conducted in accordance with the guidelines issued by the Central Board of Direct Taxes. They also mentioned that no email ID was registered in the PAN database of the petitioner, making it uncertain whether the petitioner had registered an email ID before or during the reassessment proceedings for the relevant year. The court noted that since a substantial amount was added in the assessment order, the petitioner should have been given an opportunity to explain by serving a notice. The court highlighted the importance of serving notices physically if the email ID was not available in the portal. The court referred to the Standard of Proceedings (SOP) dated 23rd November 2020 and a revised SOP dated 3rd August 2022 for Faceless Assessment provisions under Section 144B of the Act. The court directed the respondents to strictly comply with the SOP dated 3rd August 2022 to ensure that assessees have a fair opportunity to present their case before the Assessing Officer.

In response to the petitioner's request for a notice of personal hearing to be sent to specific email addresses, the court quashed and set aside the assessment order, remanding the matter for fresh consideration. The petitioner was instructed to respond to the notice received under Section 142(1) of the Act within two weeks of the portal opening. The Assessing Officer was directed to pass further orders after giving a personal hearing to the petitioner, with notice provided at least five working days in advance. The proceedings were to be completed by a specified date. Consequently, the demand notice under Section 156 of the Act and penalty show cause notice under Sections 271 and 271F of the Act were also quashed and set aside. The petition was disposed of, with a clarification that no observations were made on the merits of the case.