2022 (5) TMI 49 - HC - Income Tax

Validity of Faceless Assessment Order - petitioner states that the respondent passed the impugned assessment order without issuing any show-cause notice and draft assessment order - HELD THAT - It is settled law that the Government is bound to follow the rules and standards they themselves had set on their pain of their action being invalidated (See Amarjit Singh Ahluwalia v. State of Punjab 1974 (12) TMI 76 - SUPREME COURT and Ramana Dayaram Shetty v. International Airport Authority of India 1979 (5) TMI 144 - SUPREME COURT Since in the present case no prior show-cause notice as well as draft assessment order had been issued, there is a violation of principles of natural justice as well as mandatory procedure prescribed under Faceless Assessment Scheme . Keeping in view the aforesaid facts, the impugned assessment order, notice of demand and notice for initiation of penalty proceeding passed by the National Faceless Assessment Centre, Delhi under section 143(3) read with sections 143(3A) and 143(3B), section 156 and section 270A of the Act, are set aside and the matter is remanded back to the Assessing Officer, who shall issue a draft assessment order and thereafter pass a reasoned order in accordance with law.

Summary

Issues:
Challenging assessment order, notice of demand, and penalty proceeding under Income-tax Act, violation of natural justice in Faceless Assessment Scheme.

Analysis:
The petition challenged an assessment order, notice of demand, and penalty proceeding issued by the National Faceless Assessment Centre under the Income-tax Act. The petitioner contended that the assessment order was passed without issuing a show-cause notice and draft assessment order as required by the Faceless Assessment Scheme, violating principles of natural justice. The respondent argued that prior notices had been issued, citing one from November 17, 2020 under section 142(1) of the Act. The court noted that the Faceless Assessment Scheme mandates issuing a show-cause notice and draft assessment order before the final assessment order. Citing established legal principles, the court emphasized that the government must adhere to the rules they have set. As no prior show-cause notice or draft assessment order was issued in this case, the court found a violation of natural justice and the mandatory procedure under the Faceless Assessment Scheme.

The court set aside the impugned assessment order, notice of demand, and penalty proceeding, remanding the matter back to the Assessing Officer. The Officer was directed to issue a draft assessment order and then pass a reasoned order in accordance with the law. The court disposed of the writ petition and instructed for the order to be uploaded on the website and forwarded to the counsel via email.