2022 (9) TMI 510 - HC - Income Tax

Faceless Assessment u/s 144B - Mandatory recording of draft assessment order - violation of the principles of natural justice - Reopening of assessment and the consequent notice of demand of even date u/s 156 and show cause notice u/s 274 r.w.s. 271(1)( c) - allegation of not following due process of law by not giving any reasonable opportunity of being heard - HELD THAT - It it is only after taking into account all the relevant material available on record, that a draft assessment order is to be made, which, admittedly, has not been done as the order has been passed without considering the material uploaded on 5th March 2022. Having heard the learned counsel for Petitioner and the Revenue and having perused the material placed before us and having examined the provisions of Section 144B in relation to the aforesaid facts, we are of the view that this is a fit case for invoking our jurisdiction under Article 226 of the Constitution of India and setting aside the impugned assessment order and remanding the matter back for fresh consideration by the JAO in accordance with the provisions of Section 144B of the Act. Assessment order passed under Section 147 read with Section 144B and the consequent notice of demand of even date under Section 156 of the Act and show cause notice under Section 274 read with Section 271(1)(c) are hereby quashed and set aside and restored to the file of the JAO. The JAO is directed to pass a fresh assessment order in accordance with law within a period of fourteen weeks from the date hereof, after giving an opportunity of hearing to Petitioner.

Issues:
1. Petitioner aggrieved by order under Income Tax Act for Assessment year 2015-16.
2. Petitioner's charitable Trust did not file return due to management disputes.
3. Income Tax Officer issued notice for escaped assessment for 2015-16.
4. Petitioner participated in reassessment proceedings.
5. Notices issued by National Faceless Assessment Centre for documents.
6. Petitioner responded to notices but faced time constraints.
7. NFAC issued show cause notice and assessment order leading to demand.
8. Petitioner claims violation of natural justice principles and lack of opportunity to be heard.
9. NFAC passed assessment order without considering Petitioner's response.
10. Respondents seek to set aside assessment orders for fresh consideration.
11. Court finds fit to set aside assessment order and remand for fresh consideration.

Analysis:
1. The Petitioner, a charitable Trust, faced issues with filing tax returns due to management disputes causing delays in compiling accounts. The Income Tax Officer issued a notice for escaped assessment for the Assessment year 2015-16, to which the Petitioner responded by participating in reassessment proceedings.
2. The National Faceless Assessment Centre issued various notices calling for documents, to which the Petitioner responded within the given time frame, highlighting challenges faced due to time constraints.
3. Despite the Petitioner's responses, the NFAC issued a show cause notice and assessment order, leading to a substantial demand. The Petitioner argued a violation of natural justice principles and lack of opportunity to be heard, emphasizing that their response was not considered in the final assessment order.
4. The Court, after examining Section 144B of the Income Tax Act, found that the assessment order was passed without considering all relevant material, leading to a decision to set aside the assessment order dated 29th March 2022. The matter was remanded back for fresh consideration by the Jurisdictional Assessing Officer in accordance with the provisions of Section 144B.
5. Consequently, the assessment order, notice of demand, and show cause notice were quashed and set aside, directing the Jurisdictional Assessing Officer to pass a fresh assessment order within a specified period after giving the Petitioner an opportunity to be heard. All contentions were left open, and the petition was allowed without costs.

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