2021 (7) TMI 745 - HC - Income Tax

Procedure for assessment - mandation for the National E-Assessment Centre - Draft Assessment Order held to be mandatory and failure to issue such order cannot be treated as fatal - passed u/s 143(3) read with Sections 143(3A) and 143(3B) against the petitioner under the E-Assessment Scheme, 2019 for the Assessment Year 2017-18 - HELD THAT - A reading of the above provision would clearly show that it is mandatory for the National E-Assessment Centre to provide an opportunity to the assessee, by serving a notice calling upon him to show cause as to why the variation proposed in the Draft Assessment Order, which is prejudicial to the interest of the assessee, be not made.10. Absence of such notice would clearly be a violation of the principles of natural justice leading to the Assessment Order passed being declared void. Absence of a provision akin to Section 144B (9) in the E-Assessment Scheme, 2019 would not make any difference to such legal outcome in as much as violation of principles of natural justice renders such decision void. Even otherwise, the Income Tax authorities have to remain bound by the Statutory Scheme of assessment. In the present case as well, the impugned Assessment Order having been passed without complying with the procedure laid down in the Scheme and in violation of principles of natural justice, the writ petition would be maintainable. Consequently, the Impugned Assessment Order dated 31.03.2021 passed under Section 143(3) read with Sections 143(3A) and 143(3B) of the Act is set aside. However, the respondent/Revenue is given liberty to pass a fresh Assessment Order in accordance with law. The petitioner shall also have liberty to challenge any action of the respondent/Revenue in accordance with law, in the event that it is aggrieved by the same.

Summary

Issues:
Challenge to Assessment Order under E-Assessment Scheme, 2019 for AY 2017-18; Mandatory issuance of Draft Assessment Order; Maintainability of petition due to appeal filed; Violation of principles of natural justice in Assessment Order.

Analysis:
The petitioner challenged the Assessment Order dated 31.03.2021 under the E-Assessment Scheme, 2019 for AY 2017-18, contending that it lacked the mandatory issuance of a 'Draft Assessment Order' followed by a 'Revised Draft Assessment Order'. The respondent raised a preliminary objection on the maintainability of the petition, arguing that the petitioner had already appealed the assessment order. However, the petitioner claimed that the appeal was filed to prevent exceeding the limitation period and that the writ petition was a valid remedy due to the order being passed without jurisdiction. The petitioner cited a previous judgment to support this argument.

The absence of a provision similar to Section 144B (9) in the E-Assessment Scheme, 2019 was discussed, with the petitioner asserting that the Scheme's framework under Section 143(3A) made it mandatory for authorities to follow. It was emphasized that the failure to issue a Draft Assessment Order violated principles of natural justice, rendering the Assessment Order void. The court noted that the National E-Assessment Centre must provide the assessee with an opportunity to respond to proposed variations prejudicial to their interests.

Regarding the objection on the maintainability of the petition due to the appeal, the court rejected it, citing a previous judgment that allowed challenges to assessment orders passed without jurisdiction. The court concluded that the Assessment Order was set aside due to non-compliance with the Scheme's procedure and violation of natural justice principles. The respondent was given the opportunity to pass a fresh Assessment Order, and the petitioner was granted the right to challenge any future actions by the Revenue if aggrieved.

In summary, the court set aside the Assessment Order for AY 2017-18 under the E-Assessment Scheme, 2019, emphasizing the mandatory nature of issuing a Draft Assessment Order and the importance of adhering to principles of natural justice in such proceedings. The court's decision highlighted the significance of procedural compliance and the right of the petitioner to seek redress in case of unjust actions by the Revenue.