2021 (9) TMI 1184 - HC - Income Tax

Validity of faceless assessment u/s 144B - Violation of principles of natural justice - Petitioner states that the impugned assessment order has been passed without issuing a show cause notice and draft assessment order mandated under Section 144B(1)(xvi)(b) - HELD THAT - Section 144B(1)(xvi)(b) mandatorily provides for issuance of a prior show cause notice and draft assessment order before issuing a final assessment order. Since in the present case the averment that no show cause notice as well as draft assessment order has been issued, has not been shown to be false, there is violation of mandatory procedure stipulated in Section 144B. The impugned assessment order, notice of demand dated 23rd April 2021 and notice of penalty under Section 270A of the Act, dated 11th June 2021, are set aside and the matter is remanded back to the Assessing Officer, who shall issue another copy of the draft assessment order and a show cause notice under Section 144B(xvi) within two working days.

Summary

Issues:
Challenge to Impugned Assessment Order and Notice of Demand under Income Tax Act, 1961 for Assessment Year 2018-19.

Analysis:
The petitioner challenged the Impugned Assessment Order under Section 143(3) and the notice of demand issued under Section 156 of the Income Tax Act, 1961 for the Assessment Year 2018-19. The petitioner contended that the assessment order was passed without issuing a show cause notice and draft assessment order as mandated under Section 144B(1)(xvi)(b) of the Act, violating principles of natural justice. The respondent claimed that the show cause notice and draft assessment order were uploaded, but admitted the lack of proof of service to the petitioner.

The Court observed that Section 144B(1)(xvi)(b) mandates the issuance of a show cause notice and draft assessment order before the final assessment order. As per Section 144B(9) of the Act, assessments made after April 1, 2021, must adhere to the procedure under this section. Since the petitioner was not served with the required documents, there was a clear violation of the mandatory procedure stipulated in Section 144B of the Act.

Consequently, the Court set aside the impugned assessment order, notice of demand, and notice of penalty, remanding the matter back to the Assessing Officer. The Assessing Officer was directed to issue another copy of the draft assessment order and a show cause notice within two working days. The petitioner was given seven working days to respond, after which the Assessing Officer must pass a reasoned order in accordance with the law. The petitioner's concession regarding the limitation period for passing the Assessment Order under Section 153(6)(i) was recorded, and the writ petition along with pending applications was disposed of.

The order was to be uploaded on the website immediately, and a copy was to be forwarded to the learned counsel through e-mail.