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TMI Blog2021 (12) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... off). 2.2. During the financial year, 2018, two companies namely M/s.Gandhi Reality India Pvt. Ltd. and M/s. Crystal Organisers Pvt. Ltd. Were amalgamated with company named Ms/J.B. Realities Pvt. Ltd. by virtue of the order of the National Company Law Tribunal dated 22.10.2018. Then the name of the company was changed to the present petitioner named M/s.Gandhi Reality India Pvt. Ltd. 2.3. The case of the petitioner was selected for scrutiny. Notice u/s 143(2) of the Act was issued on 22.09.2019 to scrutinize the income from real estate business. Another notice u/s 142(1) of the Act was issued on 03.02.2021. On 07.10.2019, 07.01.2020, 03.03.2021 and 15.03.2021 the petitioner provided the basic information and requested for specific details to be supplied. 2.4. The respondent passed the assessment order without issuing any show cause notice to the petitioner on 20.04.2021 making addition of income on two issues totaling to Rs. 21,78,90,087/-. 2.5. According to the petitioner, the impugned order u/s 144(3) r.w.s. 144B of the Act being illegal, deserves quashment. 2.6. The prayer sought for are as follows: "7. The Petitioner, therefore, prays that this Hon'ble Court be plea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 30 days for preparation. 3.7. Again on 07.01.2020, referring to the details supplied under its letter dated 07.10.2019, it inquired about further details to be supplied. 3.8. On 13.10.2020 the case of the assessee was transferred from A.O. to Regional E-Assessment Unit and on 15.10.2020 the assessee was informed about the transfer of the proceedings to National Faceless Assessment Centre ("NFAC" for short). 3.9. On 04.01.2021, communication was issued under section 142(1) serving notice upon the assessee by Regional Re-Assessment Unit. 3.10. Notice was issued on 03.02.2021 under section 142(1) by NFAC. 3.11.The assessee responded to the notice on 03.02.2021 and also communicated that the details required are under preparation and hence requested for adjournment for 7 days. 3.12. Point-wise communication had been submitted on 05.03.2021 along with the documents where details in relation to the loan and advances of GSM Enterprise had been supplied. 3.13. Thereafter, on 10.03.2021 adjournment request for a period of 5 days was made by the petitioner to provide further details and on 17.03.2021, point-wise information and documents had been furnished. 3.14. On 08.04.2021 Dra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Income Tax Department to the assessee would bare a unique Document Identification Number ("DIN" for short) without which the communication is deemed to not exist, is pressed into service. Hence it is urged that what has been mandated under section 144B of the Act has not been complied with. 5. We have extensively heard submissions of learned advocate Mr.B.S. Soparkar. He has taken us through the pleadings, law on the subject and the scheme of the Act. He has also relied on the following three decisions : [1] Radha Krishan Industries Versus State of Himachal Pradesh and others, reported in 2021 SCC Online SC 334. [2] McKinsey & Co. Inc. Versus Union of India, reported in [2010] 324 ITR 367 (Bombay) and [3] Engineering Professional Co.(P). Ltd. Versus Deputy Commissioner of Income Tax, Circle1(1)(1), reported in [2020] 424 ITR 253 (Gujarat). 5.1. Mr.Soparkar has empathetically urged that there has been a reiterative emphasise on the part of the petitioner that the Draft Assessment order which is mandatorily contemplated under the statute has not been supplied. 5.02. The respondent has never issued a show cause notice subsequent to receiving of the information and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of India by holding that it is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, Mandamus, etc. for the enforcement of any of the fundamental rights contained in Part III of the Constitution but also for "any other purpose". The Apex Court held that the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. 7.2. This has been reiterated by the Apex Court in the case of Radha Krishan Industries Versus State of Himachal Pradesh reported in 21 SCC Online SC 334. Relevant paragraph reads thus : "27. Following the dictum of this Court in Whirlpool (supra), in Harbanslal Sahnia v. Indian Oil Corpn. Ltd., this court noted that: "7. So far as the view taken by the High Court that the remedy by way of recourse to ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion; and (vi) In cases where there are disputed questions of fact, the High Court may decide to decline jurisdiction in a writ petition. However, if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with." 7.3. In the matter on hand, the petitioner has approached this court with an emphasise on clear violation of principles of natural justice and action in total disregard to the provisions of law which makes the end order non-est statutorily. Emphasizing the requirement of law on the statute after section 144B has been inserted. It is the case of the petitioner that the respondent is obligated to issue Draft Assessment Order before issuance of the final assessment order . In the instant case, in absence of service of any Draft Assessment Order as well as show cause notice, a complete violation of not only principle of natura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l issue appropriate notice or requisition to the assessee or any other person for obtaining the information, documents or by the assessment unit; (vii) the assessee or any other person, as the case may be, shall file his response to the notice referred to in clause (vi), within the time specified therein or such time as may be extended on the basis of an application in this regard, to the National Faceless Assessment Centre; (viii) where a request for conducting of certain enquiry or verification by the verification unit has been made by the assessment unit, the request shall be assigned by the National Faceless Assessment Centre to a verification unit in any one Regional Faceless Assessment Centre through an automated allocation system; (ix) where a request for seeking technical assistance from the technical unit has been made by the assessment unit, the request shall be assigned by the National Faceless Assessment Centre to a technical unit in any one Regional Faceless Assessment Centre through an automated allocation system; (x) the National Faceless Assessment Centre shall send the report received from the verification unit or the technical unit, based on the request re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty to the assessee, in case any variation prejudicial to the interest of assessee is proposed, by serving a notice calling upon him to show cause as to why the proposed variation should not be made; or (c) assign the draft assessment order to a review unit in any one Regional Faceless Assessment Centre, through an automated allocation system, for conducting review of such order; (xvii) the review unit shall conduct review of the draft assessment order referred to it by the National Faceless Assessment Centre whereupon it may decide to (a) concur with the draft assessment order and intimate the National Faceless Assessment Centre about such concurrence; or (b) suggest such variation, as it may deem fit, in the draft assessment wat order and send its suggestions to the National Faceless Assessment Centre; (xviii) the National Faceless Assessment Centre shall, upon receiving concur rence of the review unit, follow the procedure laid down in- (a) sub-clause (a) of clause (xvi); or (b) sub-clause (b) of clause (xvi); (xix) the National Faceless Assessment Centre shall, upon receiving suggestions for variation from the review unit, assign the case to an assessment unit, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ft assessment order or the final draft assessment order, forward the said revised draft assessment order to such assessee; (B) in any other case, finalise the assessment as per the revised draft assessment order and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee. alongwith the demand notice, specifying the sum payable by chor refund of any amount due to, the assessee on the basis of order are prejudicial to the interest of the assessee in comparison to the draft assessment order or such assessment; (b) in case the variations proposed in the revised draft assessment order are prejudicial to the interest of the assessee in comparison to the draft assessment order or final draft assessment order, provide an opportunity to the assessee, by serving a notice calling upon himi to show cause as to why the proposed variation should not be made; (xxvi) the procedure laid down in clauses (xxiii), (xxiv) and (xxv) shall apply mutatis mutandis to the notice referred to in sub-clause (b) of Clause (xxv); (xxvii) where the draft assessment order or final draft assessment order or revised draft assessment order is forwarded to the eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard may, for the purposes of faceless assessment, set up the following Centres and units and specify their respective jurisdiction, namely; (i) a National Faceless Assessment Centre to facilitate the conduct of faceless assessment proceedings in a centralised manner, which shall be vested with the jurisdiction to make faceless assessment; (ii) Regional Faceless Assessment Centres, as it may deem necessary, facilitate the conduct of faceless assessment proceedings in the cadre controlling region of a Principal Chief Commissioner, which shall be vested with the jurisdiction to make faceless assessment; (iii) assessment units, as it may deem necessary to facilitate the conduct of faceless assessment, to perform the function of making assessment, which includes identification of points or issues material for determination of any liability (including refund) under the Act, seeking information or clarification on points or issues so identified analysis of the material furnished by the assessee or any other person, and such other functions as may be required for the purposes of making faceless assessment; (iv) verification units, as it may deem necessary to facilitate the conduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anged exclusively by electronic mode; and all internal communications between the National Faceless Assessment Centre, Regional Faceless Assessment Centres and various units shall be exchanged exclusively by electronic mode: Provided that the provisions of this sub-section shall not apply to the enquiry or verification conducted by the verification unit in the circumstances referred to in subclause of clause (xii) of sub-section (7); (7) For the purposes of faceless assessment- (i) an record shall be authenticated by (a) the National Faceless Assessment Centre by affixing its digital signature; (b) assessee or any other person, by affixing his digital signature if he is required to furnish his return of income under digital signature, and in any other case, by affixing his digital signature or under electronic verification code in the prescribed manner; (ii) every notice or order or any other electronic communication shall be delivered to the addressee, being the assessee, by way of- (a) placing an authenticated copy thereof in the assessee's registered account; or (b) sending an authenticated copy thereof to the registered address of the assessee or his authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... telecommunication application software which supports video conferencing or video telephony, in accordance with the procedure laid down by the Board; (x) subject to the proviso to sub-section (6), any examination or recording of the statement of the assessee or any other person (other than statement recorded in the course of survey under section 133A of the Act) shall be conducted by an income-tax authority in any unit, exclusively through video conferencing or video telephony, including Smouse of any telecommunication application software which supports video conferencing or video telephony in accordance with the procedure laid down by the Board; (xi) the Board shall establish suitable facilities for video conferencing or video telephony including telecommunication application software which supports video conferencing or video telephony at such loc tions as may be necessary, so as to ensure that the assessee, or his authorised representative, or any other person is not denied the benefit of faceless assessment merely on the consideration that such assessee or his authorised representative, or any other person does not have access to video conferencing or video telephony at h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of this Act or under any scheme notified under the provisions of this Act; and the request for verification may also be assigned by the National Faceless Assessment Centre to such verification unit.] Explanation. In this section, unless the context otherwise requires- (a) addressee shall have the same meaning as assigned to it in clause of sub-section (1) of section 2% of the Information Technology 2000 (21 of 2000); (b) "authorised representative" shall have the same meaning as assigned to it in sub-section (2) of section 288; (c) "automated allocation system" means an algorithm for randomised allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimise the use of resources; (d) "automated examination tool" means an algorithm for standardised examination of draft orders, by using suitable technological tools, including artificial intelligence and machine learning, with a view to reduce the scope of discretion; (e) "computer resource" shall have the same meaning as assigned to it in clause (k) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000); (f) "comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice on his registered mobile number, or by way of update on his Mobile App, or by way of an email at his registered email address, so as to alert him regarding delivery of an electronic communication; (s) "registered account" of the assessee means the electronic filing account registered by the assessee in designated portal; (t) "registered e-mail address" means the e-mail address at which an filing electronic communication may be delivered or transmitted to the addressee, including- (i)the e-mail address available in the electronic filing account of the addressee registered in designated portal; or (ii) the e-mail address available in the last income- tax return furnished by the addressee; or (iii) the e-mail address available in the Permanent Account Number database relating to the addressee; or (iv) in the case of addressee being an individual who possesses the Aadhaar number, the e-mail address of addressee available in the database of Unique Identification Authority of India; or (v) in the case of addressee being a company, the e-mail address of the company as available on the official website of Ministry of Corpo rate Affairs; (vi) any e-mail address made ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n accordance with the risk management strategy specified by the Board, if there is variation prejudicial to the interest of the assessee, it can finalise the assessment and serve copy of the order and notice to the assessee for initiating penalty proceedings, or for refund of any amount. However, when there is question of any variation, which may prove to be prejudicial to the interest of assessee, it is obligated to provide an opportunity to the assessee by serving a notice and calling upon him to show cause as to why proposed variation be not made or it has the third option of sending it back to the Regional Faceless Assessment Centre for conducting review of such order; 7.10. It is quite clear from the very provision that the assessee is required to be provided an opportunity once there is a possibility of any variation which may turn prejudicial to the interest of the assessee. What is expected of the NFAC is to serve a notice calling upon the assessee to show cause as to why the proposed variation be not made. This has to be done by furnishing Draft Assessment Order along with show cause notice. It is in other words, statutory obligation of the NFAC to serve upon the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-18 after complying with the requirement of the law by giving the Petitioner a personal hearing at a date and time, which should be communicated to the Petitioner sufficiently in advance. It is needless to say that the Petitioner assessee will cooperate in the fresh assessment proceedings and furnish all the documents and information as are available with it relevant to the proceedings." 9. The Delhi High Court in W.P.(C) 5849/2021 in the case of Gurgaon Realtech Limited versus National Faceless Assessment Centre Delhi (Earlier national Eassessment Centre Delhi), delivered on 04.06.2021 was considering the identical issue where challenge to the assessment order was passed on the ground of the same having been passed without jurisdiction. Following are the findings and observations which deserve reproduction. "9. We have considered the submissions made by the learned counsel for the parties. 9.1. To our minds, if the challenge to the assessment order is made on the ground that it was passed without jurisdiction, then, notwithstanding the fact that an appeal was filed, albeit, only to ensure that the limitation is not crossed, is not an impediment in proceeding ahead with the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with the assessment process, albeit, under the provisions of Section 144B of the Act. Needless to add, if a show cause notice-cum-draft assessment order is served on the petitioner, an opportunity would be given to the petitioner to file its response/objections to the same. Furthermore, if there is a variation proposed in the income of the petitioner, an opportunity of personal hearing will also be accorded. In sum, the procedure prescribed under Section 144B of the Act will be followed by the respondent/revenue." 10. The Delhi High Court in the case of in W.P.(C) 6662/2021 in the case of Rani Promotors Private Rotomoter Pvt. Ltd. Versus Additional Commissioner of Income Tax on 19th July, 2021 also considered the same question. The court availing an opportunity of hearing be set aside the impugned order which was passed availing such opportunity. Relevant paragraphs of the aforesaid decisions read thus: "12. In any event, this issue is no longer res integra as a Coordinate Bench of this Court in Gurgaon Realtech Limited v. National Faceless Assessment Centre Delhi, W.P. (C) 5849/2021 has held that the Assessment Order could not have been passed under Section 143(3A) and 143(3B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that Section 144B of the Act had been violated and the assessment proceeding had been completed in the present case in violation of the principles of natural justice. 15. Consequently, this Court sets aside the impugned assessment order dated 06th April, 2021 as also the notice of demand issued under Section 156 of the Act and the notice for initiating the penalty proceedings under Section 274 read with Section 270A of the Act. 11. Reverting to the facts of the case on hand, we could notice from the chronology of the events presented before us by the respondent authority that the return of the petitioner Company was selected for scrutiny and notice u/s 143(2) of the Act was issued on 22.09.2019. Date of hearing was fixed on 07.10.2019. Various responses have been given by the petitioner. It also sought time and review was also filed. Opportunity for filing reply and furnishing the document was granted. The assessee was also informed on 15.10.2020 about transfer of proceedings to the NFAC and notice was also issued to the assessee by the Regional Reassessment Centre on 04.01.2021 u/s. 142(1) of the Act. Notice of NFAC to the petitioner was issued on 03.02.2021 under section 142 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hange or authenticated copy of service to the assessee, there is no reason for this Court to accept the version of the respondent about the service. 16. We are in total disagreement with the revenue that on account of issuance of notice u/s. 143(2) dated 22.09.2019 and opportunities provided earlier to the assessee, acceding to his request would be a mitigating circumstance so far as non-service of the Draft Assessment Order is concerned. The opportunity of furnishing the documents and hearing which has been given time and again and requests acceeded to by the authority to the assessee at that stage would not eventually culminate into furnishing of the final assessment order without service of prior notice along with draft assessment order, if any additions are made to the prejudice of the assessee. 17. It is a statutory requirement, as discussed hereinabove, more particularly when any assessment order is to be made which is likely to be prejudicial to the interest of the assessee. NFAC if would have served upon the assessee the draft assessment order, its presence on web portal would invariably there. In virtual regime, noticing of or presence or absence of trail of action is no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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