2021 (6) TMI 15 - HC - Income Tax

Faceless assessment u/s 144B - Validity of assessment order passed u/s 143(3) r.w.s. 143(3A) 143(3B) - consequential notice of demand issued under Section 156 of the Act, and notice for initiation of penalty proceedings issued under Section 274 read with Section 270A of the Act - principal grievance of the petitioner that the impugned assessment order was passed without issuance of a show cause notice-cum draft-assessment order - HELD THAT - Since there was a variation in the declared income, the respondent was required to issue a show cause notice-cum-draft assessment order, in consonance with the provisions of Section 144B of the Act and the Faceless Assessment Scheme, 2019. Accordingly, the impugned assessment order, and the consequential notices issued, i.e., notice of demand issued under Section 156 of the Act, and notice for initiation of penalty proceedings issued under Section 274 read with Section 270A of the Act, are set aside

Summary

Issues:
1. Exemption from filing court fee and sworn affidavit.
2. Challenge to assessment order under Income Tax Act, 1961.
3. Lack of show cause notice-cum-draft assessment order.
4. Variation in declared income and addition to income.
5. Compliance with Section 144B and Faceless Assessment Scheme, 2019.

Exemption from filing court fee and sworn affidavit:
The petitioner sought exemption from filing requisite court fee and sworn/notarised/affirmed affidavit. The court allowed the application subject to exceptions, directing the petitioner to submit the sworn affidavit and court fee within three days of the court's normal work pattern resumption.

Challenge to assessment order under Income Tax Act, 1961:
The writ petition challenged the assessment order dated 07.04.2021 under Sections 143(3), 143(3A), and 143(3B) of the Income Tax Act, 1961, for Assessment Year 2018-2019. The petitioner contended that the assessment order was issued without a show cause notice-cum-draft assessment order. The court issued notice to the respondent/revenue and set aside the assessment order and consequential notices, granting liberty to the revenue to pass a fresh assessment order in accordance with the law.

Lack of show cause notice-cum-draft assessment order:
The petitioner's main grievance was the absence of a show cause notice-cum-draft assessment order before the issuance of the assessment order. The court noted the variation in the declared income and emphasized the necessity of following the provisions of Section 144B of the Act and the Faceless Assessment Scheme, 2019. Referring to a previous judgment, the court set aside the assessment order and related notices.

Variation in declared income and addition to income:
Initially, the petitioner declared an income of ?87,55,390, later revised to ?73,59,500. The assessment order dated 07.04.2021 added ?13,95,890 to the declared income. The court highlighted the significance of issuing a show cause notice-cum-draft assessment order in cases of income variation, as per statutory requirements and the Faceless Assessment Scheme, 2019.

Compliance with Section 144B and Faceless Assessment Scheme, 2019:
The court emphasized the importance of adhering to Section 144B of the Act and the Faceless Assessment Scheme, 2019, in assessment proceedings. Citing a previous judgment, the court set aside the impugned assessment order and related notices, granting the revenue the opportunity to conduct a fresh assessment order while ensuring a personal hearing for the petitioner's authorized representative through video conferencing.