2024 (8) TMI 368 - HC - Income Tax

Validity of order passed by Faceless Assessment Unit - assessment order was passed beyond the expiry of seven days from the date of issuance of the show-cause - Violation of principles of natural justice - HELD THAT - It is not in dispute that the Submit Response Button on the portal, for submission of response to the show-cause was deactivated on the expiry of the period for filing of the response. This prompted the petitioner to file the response with the Help Desk Grievance Cell. Although, the Faceless Assessment Unit may not have an opportunity to go through the response filed by the petitioner but the order passed by the Faceless Assessment Unit stands vitiated on the ground of violation of principles of natural justice as also failure to comply with the SOP as noted. In view thereof, the order passed u/s 147 r.w.s. 144B of the said Act for the AY 2018-19 is set aside. The matter is remanded back to the Faceless Assessment Unit. Since, the response filed by the petitioner is already on record, the Faceless Assessment Unit is directed to take note of such response and to dispose of the proceeding.

Summary

Issues:
Challenging assessment order under Income Tax Act for Assessment Year 2018-19; Adequate opportunity to respond to show-cause notice; Violation of principles of natural justice and statutory provisions; Compliance with Standard Operating Procedure (SOP) for Faceless Assessment Unit; Response submission issues and access by Faceless Assessment Unit.

Analysis:
The writ petition challenged an assessment order under the Income Tax Act for the Assessment Year 2018-19, specifically focusing on the petitioner's contention regarding the lack of adequate opportunity to respond to a show-cause notice issued by the Faceless Assessment Unit. The petitioner argued that despite being served a show-cause notice, the time provided to respond was insufficient, not complying with the SOP guidelines requiring a minimum of 7 days response time. This breach of SOP was highlighted as a violation of both natural justice principles and statutory provisions.

The petitioner, represented by Mr. Mazumder, emphasized that the response was eventually filed, albeit belatedly, due to technical issues with the submission portal. The Faceless Assessment Unit proceeded with the assessment order without considering the petitioner's response, leading to allegations of further violations of principles of natural justice and SOP guidelines. The petitioner sought to set aside the assessment order and remand the matter back to the Faceless Assessment Unit for proper consideration of the response.

In response, Mr. Dutt, representing the respondents, argued that the petitioner had sufficient opportunity to respond and failed to do so within the specified time frame. He contended that the response filed by the petitioner with the Grievance Help Desk was not accessible to the Faceless Assessment Unit, absolving them of any fault in not considering the response.

The judgment highlighted the elaborate procedures laid down for proceedings by the Faceless Assessment Unit, emphasizing the importance of adherence to SOP guidelines issued by the Central Board of Direct Taxes. The court noted that the show-cause notice did not provide the minimum required response time of seven days, which was a clear violation of the SOP and principles of natural justice. The judgment referenced a previous case to support the requirement for reasonable response time and adherence to SOP guidelines.

Ultimately, the court set aside the assessment order, remanding the matter back to the Faceless Assessment Unit with directions to consider the petitioner's response on record and dispose of the proceeding in accordance with the law within a specified timeframe. The decision was based on the grounds of violation of natural justice principles and failure to comply with SOP guidelines, ensuring a fair opportunity for the petitioner to present their case.