2022 (4) TMI 1322 - HC - Income Tax

Validity of National Faceless Assessment orders - petitioners have challenged the impugned Assessment Orders primarily on the ground that the assessment by the National Faceless Assessment Centre is contrary to the Board circular in Circular No. 225/61/2021/ITA-II dated 10.06.2021 - HELD THAT - It is evident that the Assessing Officers hardly get enough time to go through the case file to pass a proper and well-settled considered Assessment Order. Instances of order being passed without proper consideration of all the facts are increasing and results in mechanical orders which prone to challenge under Article 226 of the Constitution of India. Both the Assessees and the Assessing Officers are under tremendous pressure to meet deadlines as the Show Cause Notices itself are being issued at the fag end of the limitation. Therefore, the assessment procedure needs to be strengthened by giving adequate time both to the assessees and the Assessing Officer who are assigned to pass Assessment Order under the National Faceless Assessment Regime. This needs to be addressed by the authorities who are implementing the Faceless Assessment. This may be suitably addressed by the authorities and the system is strengthened so that both the assessees and the Assessing Officer get adequate time in the assessment proceedings. Considering the fact that the impugned Assessment Orders have been passed without any discussion, these Writ Petitions are allowed by remitting the case back to the National Faceless Assessment Centre to pass a fresh order within a period of sixty days based on the reply filed by the petitioners even though the petitioners had filed statutory appeal under Section 246A of the Income Tax Act, 1961 before the Appellate Commissioner. The respondents are directed to fix a hearing through video conferencing and also instruct the Administrator of the Web Portal to permit the petitioners time to file additional reply/representations, if any, before fresh orders passed.

Summary

Issues Involved:
Challenging Assessment Orders based on procedural grounds and lack of discussion in orders.

Analysis:
The writ petitions were filed against Assessment Orders for the Assessment Years 2019-2020, challenging the assessment by the National Faceless Assessment Centre. The petitioners argued that the assessment contradicted a Board circular and that the orders lacked reasoning. The impugned Assessment Orders were criticized for merely reproducing the petitioners' reply without proper discussion or justification for the conclusions reached.

The respondents defended the assessment, stating it wasn't solely document-based and that the petitioners didn't object to the jurisdiction of the National Faceless Assessment Centre. They argued that the petitioners had opted for statutory appeal before the Appellate Commissioner, making the writ petitions unnecessary. The respondents emphasized the efficacy of the alternative remedy available under the Income Tax Act, 1961.

In response, the petitioners highlighted concerns about the Appellate Commissioner's power being restricted, leading them to file an appeal due to expiring limitations. They contended that the impugned Assessment Orders were non-speaking and failed to provide adequate reasoning, affecting their ability to challenge the decisions effectively.

After reviewing the Assessment Orders, the Board circular, and relevant provisions of the Income Tax Act, 1961, the court found the orders lacking in discussion and justification. It noted that the assessment process under the National Faceless Assessment regime left insufficient time for both assesses and Assessing Officers to respond adequately, leading to mechanical and non-speaking orders.

The court acknowledged the pressure on both parties due to tight deadlines and called for a strengthened assessment procedure with sufficient time for thorough consideration. It directed the case to be remitted back to the National Faceless Assessment Centre for a fresh order within sixty days, emphasizing the importance of providing adequate time for assessment proceedings.

Additionally, the respondents were instructed to arrange a video conferencing hearing and allow the petitioners to submit additional replies or representations before the new orders were passed. The court left open the issue of jurisdiction for the petitioners to raise before the first respondent. No costs were awarded, and the connected Writ Miscellaneous Petitions were closed, concluding the judgment.