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2021 (5) TMI 529 - HC - Income TaxNotice under Section 142(1) - Faceless Assessment - breach of the principles of natural justice - assessee not given a fair opportunity to explain his position on the proposed additions/disallowances - As submitted AO was required to issue a show-cause notice qua each of the additions/disallowances made to the petitioner's declared income - HELD THAT - As each of the notices issued by the AO, under Section 142(1) of the Act, was replied. This is evident upon a perusal of paragraph 2 of the impugned assessment order. Broadly, the purpose of issuance of notice under Section 142(1) of the Act is, to gather information from the assessee. However, before an addition is made, it evident that the CBDT instruction, dated 29.12.2015, requires issuance of a show-cause notice and an opportunity to be given to the noticee, i.e., the assessee to respond to the same. This step, it appears, at least at this stage, was not taken by the AO qua the petitioner. Therefore, according to us, the matter requires further examination. Accordingly, issue notice.
Issues Involved:
1. Application for exemption from filing attested affidavits and extension of time for court fees. 2. Challenge against assessment order under Faceless Assessment Scheme, 2019. 3. Compliance with CBDT instruction regarding show-cause notice. 4. Examination of the matter and stay on the operation of the assessment order. Analysis: Issue 1: Application for exemption from filing attested affidavits and extension of time for court fees - An application was filed seeking exemption from filing attested affidavits and extension of time for depositing court fees. The application was allowed, subject to the petitioner submitting the attested affidavits and depositing the court fees within three days of the court's normal functioning. Issue 2: Challenge against assessment order under Faceless Assessment Scheme, 2019 - The writ petition challenged the assessment order dated 22.04.2021, carried out under the Faceless Assessment Scheme, 2019, for the assessment year 2018-2019. The additions made by the Assessing Officer to the petitioner's income totaled &8377; 16,83,95,000. The AO also disallowed expenses, resulting in a taxable income of &8377; 18,67,75,079, with a demand of &8377; 16,91,13,470. The petitioner argued non-compliance with CBDT Instruction no. 20/2015, emphasizing the need for a show-cause notice for additions/disallowances. Issue 3: Compliance with CBDT instruction regarding show-cause notice - The petitioner contended that the AO did not issue a show-cause notice as required by the CBDT instruction, while the respondent argued that notices under Section 143(2) and questionnaires under Section 142(1) were served, fulfilling the principles of natural justice. The court noted the need for a show-cause notice before making additions and ordered further examination of the matter. Issue 4: Examination of the matter and stay on the operation of the assessment order - After hearing both parties, the court observed the absence of a show-cause notice as per CBDT instruction and directed the respondent to file a counter-affidavit within six weeks. A stay was granted on the operation of the assessment order dated 22.04.2021 until the next hearing scheduled for 25.08.2021. The matter was listed for further proceedings.
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