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2025 (3) TMI 1277 - HC - Income TaxValidity of assessment order passed u/s 143(3) r.w.s. 144B - violation of principles of natural justice due to non-consideration of the petitioner s application u/s 144A - HELD THAT - The procedure u/s 144B of the Income Tax Act 1961 makes it clear that there are adequate safeguards during assessment. Clause (iii) Sub- Section (1) Section 144B of the Income Tax Act 1961 mandates that the assessment will be completed in accordance with the procedure laid down under section 144B of the Income Tax Act 1961. Clause (iv) to Sub-Section 144B of the Income Tax Act 1961 also makes it clear that the National Faceless Assessment Centre shall assign the case selected for the purpose of Faceless Assessment to a Specific Assessment Unit (SAU) in any one of the Regional Assessment Centre (RAC) through an automated allocation system. The Assessing Unit under Section 144B consist of Senior Officials of the Income Tax Act 1961. The case of the petitioner that the impugned Assessment Order dated 28.9.2021 has been passed without awaiting for order under Section 144A of the Income Tax Act 1961 of the Joint Commissioner in response to be application dated 13.09.2021 filed by the petitioner under the aforesaid provision cannot be countenanced. That apart the Joint Commissioner of Income tax is a functionary of the Assessment unit. Therefore the jurisdictional Joint Commissioner cannot issue any directions to the Assessment Unit contemplated for completing the assessment u/s 144B of the Income Tax Act 1961. With the incorporation of Section 144B of the Income Tax Act 1961 the role of the Jurisdictional Joint Commissioner of Income Tax under Section 144A of the Income Tax Act 1961 has become redundant to the extent where the assessment under section 144B of the Income Tax Act 1961 is contemplated. Section 144A of the Income Tax Act 1961 will apply under limited circumstances where the assessment continues with the Jurisdictional Assessing Officer. The National Faceless Assessment Centre has to assign case to a specific Assessment Unit (SAU) in any Regional Faceless Assessment Centre (RFAC) through an Automated Allocation System. The specific Assessment Unit can request the National Faceless Assessment Centre for obtaining such information documents or evidence from the assessee or any other person or for conducting an enquiry or Verification Unit or seek technical assistance from the Technical Units. After receipt of concurrence from the Review Unit on the draft assessment order the National Faceless Centre has to once again follow the procedure in clause 16 sub-Clause A or B or Clause 16 of Section 144B(1). It is therefore the National Faceless Assessment Centre assigned the case to an Assessment Unit or other than an Assessment Unit which has made a draft assessment order through an Automated Allocation System. Assessment Unit too thereafter considers the variation suggested by the Review Unit final draft assessment order from the National Faceless Assessment Centre. Where again the procedure under Clause (A) or (B) of Clause XVI to Section 144B of the Income Tax Act 1961 has to be followed. Thus there is no scope for interplay between Section 144A of the Income Tax Act 1961 and where assessment is made under Section 144B of the Income Tax Act 1961. Accordingly this Writ Petition is dismissed. However liberty is given to the petitioner to file a Statutory Appeal before the Appellate Commissioner within a period of 30 days from the date of receipt of a copy of this order.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS 1. Applicability of Section 144A in light of Section 144B: Relevant legal framework and precedents: Section 144A allows the Joint Commissioner to issue directions for assessment guidance, while Section 144B establishes a faceless assessment procedure. Court's interpretation and reasoning: The Court found that Section 144B, introduced on 01.04.2021, is a comprehensive code for faceless assessments. It supersedes the need for directions under Section 144A, rendering it redundant in cases where Section 144B is applicable. The Court emphasized that the faceless assessment process is designed to operate independently of traditional jurisdictional oversight, including that of the Joint Commissioner. Application of law to facts: The Court noted that the petitioner filed an application under Section 144A shortly before the assessment order was issued, which was not entertained due to the prevailing faceless assessment framework. Treatment of competing arguments: The Court rejected the petitioner's argument that the assessment should have awaited a direction under Section 144A, as the faceless assessment procedure under Section 144B does not accommodate such interplay. Conclusions: The Court concluded that the assessment under Section 144B was valid and that Section 144A was not applicable in this context. 2. Violation of natural justice principles: Relevant legal framework: The principles of natural justice require fair hearing and consideration of relevant applications and submissions. Court's interpretation and reasoning: The Court determined that the faceless assessment procedure under Section 144B includes adequate safeguards and opportunities for the assessee to present their case, thus complying with natural justice principles. Application of law to facts: The Court observed that the petitioner had opportunities to respond to notices and present their case electronically, in line with the faceless assessment framework. Treatment of competing arguments: The petitioner's claim of non-application of mind and lack of consideration was countered by the Court's finding that the faceless assessment process inherently provides for procedural fairness. Conclusions: The Court found no violation of natural justice principles in the assessment process. 3. Alternative remedy under Section 246A: Relevant legal framework: Section 246A provides for an appeal mechanism against assessment orders. Court's interpretation and reasoning: The Court highlighted the availability of an alternative remedy through statutory appeal, which is a more appropriate forum for addressing grievances related to assessment orders. Application of law to facts: The Court noted that the petitioner could pursue an appeal under Section 246A to contest the assessment order and related computations. Treatment of competing arguments: The Court dismissed the need for interference under Article 226, given the availability of a statutory appeal process. Conclusions: The Court emphasized the importance of exhausting alternative remedies before seeking judicial intervention. 4. Computation of income and rejection of benefits under Section 11(2): Relevant legal framework: Section 11(2) pertains to the accumulation of income by charitable trusts. Court's interpretation and reasoning: The Court did not delve deeply into the merits of the computation, as it directed the petitioner to pursue the matter through the appellate process. Application of law to facts: The Court acknowledged the petitioner's contention regarding computation errors but deferred substantive examination to the appellate authorities. Treatment of competing arguments: The Court recognized the petitioner's arguments on computation but maintained that these should be addressed through the statutory appeal mechanism. Conclusions: The Court refrained from making a determination on the computation merits, directing the petitioner to the appellate process for resolution. SIGNIFICANT HOLDINGS The Court held that:
Final determinations on each issue were made in favor of upholding the assessment order, with directions for the petitioner to pursue statutory appeals for any grievances.
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