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TMI Blog2024 (1) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... 30/03/2022, annexed hereto at Annexure - 'H colly.' (B) Pending admission, hearing and disposal of this petition, ad-interim relief be granted and the Respondent be ordered to restrain from enforcing compliance of the impugned Assessment order under Section 147 read with Section 144B of the Income Tax Act, 18961 and the Demand Notice under Section 156 dated 30.03.2022, annexed hereto at Annexure - 'H colly.'" 3. Brief facts in nutshell are reproduced as under: 3.1 The writ applicant claims to be paying regular income tax return and is subjected to such assessment of income by the Income Tax Office at Ahmedabad. According to the writ applicant, the return of income for the A.Y. 2016-17 was filed on 22.07.2016, however, on 30.03.2021, the writ applicant had received a notice under Section 148 of the Income Tax Act. On 06.07.2021, the writ applicant was served with a copy of reasons recorded, thereby pointing out the significant transactions noticed by the Income Tax Department entered into by the assessee. It was further mentioned that on perusal of the details available on record, the assessee had undertaken financial transactions much beyond the taxable limits. The reference w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant had directly approached this Court in writ jurisdiction praying for quashing and setting aside the aforesaid final order as well as demand notice dated 30.03.2022 raised by the respondent Department. 4. Considering the averments made in the writ petition, this Court by order dated 19.04.2022, had issued Notice upon the respondent authorities and by ad interim order had restricted the respondent authorities from enforcing the compliance of the impugned assessment order under Section 147 read with Section 144B of the Act and the demand notice dated 30.03.20922 under Section 156 of the Act. 5. We have heard Mr. Darshan Patel, learned advocate, who has appeared on behalf of the writ applicant and Mr. Varun Patel, learned advocate on panel of the respondent Department. 6. Learned advocate for the writ applicant at the outset, has invited attention of this Court to the aforesaid facts of the case and has submitted that the respondent authorities have failed to comply with the mandatory procedure laid down under Section 144B of the Act. By referring to the aforesaid provisions, the learned advocate has submitted that the final assessment order under Section 147 read with Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the respondent authorities has referred to the affidavit in reply filed by Mr. Manish H. Dafda, Income Tax Officer - Ward 1(3)(1), Ahmedabad to submit that from the perusal of the order-sheet of ITBA, it appears that the assessment order was passed without serving draft order upon the writ applicant. He, therefore, urged this Court to pass the appropriate order. 9. Having heard the learned advocates appearing for the respective parties and having perused the record, indisputably, the aspect of non-service of draft assessment order, which was otherwise required to be sent along with show cause notice as per the procedure prescribed under Section 144B(1), clause (xvi)(b) of the Income Tax Act has been confirmed. The compliance of mandatory procedure as envisaged in the aforesaid provision ie. of issuance of show cause notice, the draft assessment order, the final assessment order and the consequential demand notice is no more res integra. The plain reading of the provisions of Section 144B of the Act, which provides for Faceless Assessment for determination to be carried out under Sections 143(3) and 144 envisages the procedure to be followed by the Authority. The plain reading o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r- (a) obtaining such further information, documents or evidence from the assessee or any other person, as it may specify; (b) conducting of certain enquiry or verification by verification unit; and (c) seeking technical assistance from the technical unit; (vi) where a request for obtaining further information, documents or evidence from the assessee or any other person has been made by the assessment unit, the National Faceless Assessment Centre shall issue appropriate notice or requisition to the assessee or any other person for obtaining the information, documents or evidence requisitioned 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , including by way of an automated examination tool, whereupon it may decide to- (a) finalise the assessment, in case no variation prejudicial to the interest of assessee is proposed, as per the draft assessment order and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee, along with the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment; or (b) provide an opportunity 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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v) the National Faceless Assessment Centre shall, upon receiving the revised draft assessment order,- (a) in case the variations proposed in the revised draft assessment order are not prejudicial to the interest of the assessee in comparison to the draft assessment order or the final draft assessment order, and- (A) in case the revised draft assessment order is in respect of an eligible assessee and there is any variation prejudicial to the interest of the assessee proposed in draft 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, along with the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of 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 the final draft assessment order, provide an opportunity to the assessee, by servin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the electronic records of the case to the Assessing Officer having jurisdiction over the said case for such action as may be required under the Act. (2) The faceless assessment under sub-section (1) shall be made in respect of such territorial area, or persons or class of persons, or incomes or class of incomes, or cases or class of cases, as may be specified by the Board. (3) The Board 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, to 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it or with the assessee or any other person with respect to the information or documents or evidence or any other details, as may be necessary for the purposes of making a faceless assessment shall be through the National Faceless Assessment Centre. (6) All communications between the National Faceless Assessment Centre and the assessee, or his authorised representative, or any other person shall be exchanged 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 sub-clause (g) of clause (xii) of sub-section (7). (7) For the purposes of faceless assessment- (i) an electronic 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 cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred to in clause (vii) if he is of the opinion that the request is covered by the circumstances referred to in sub-clause (h) of clause (xii); (ix) where the request for personal hearing has been approved by the Chief Commissioner or the Director General, in charge of the Regional Faceless Assessment Centre, such hearing shall be conducted exclusively through video conferencing or video telephony, including use of any 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 use 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 videoconferencing or video telephony including telecommunicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than the cases transferred under sub-section (8), on or after the 1st day of April, 2021), shall be non-est if such assessment is not made in accordance with the procedure laid down under this section. Explanation.-In this section, unless the context otherwise requires- (a) "addressee" shall have the same meaning as assigned to it in clause (b) of sub-section (1) of section 2 of the Information Technology Act, 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); ..... 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 e-mail 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 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 email address of the company as available on the official website of Ministry of Corporate Affairs; or (vi) any e-mail address made availa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he return filed by the writ applicant as regards disallowance. The final assessment order is not made in accordance with the procedure envisaged under section 144 (xvi) (b) of the act as inspite of the variation being prejudicial to the assessee, no opportunity has been given to the assessee by serving show cause notice along with draft assessment order calling upon him to show cause as to why the proposed variation should not be made. Thus, we have no doubt in holding that the impugned order of assessment dated 07.04.2021 is invalid and nonest, passed in gross violation of principles of natural justice as well as mandatory provision in the form of section 144B of the act. In such circumstances referred to above, we are left with no other option but to quash the assessment order and remit the matter to the Assessing Officer." 10. In light of the aforesaid settled legal position and in the facts and circumstances of the case, the impugned final assessment order dated 30.03.2022 issued by the respondent authorities is hereby declared as non-est and is quashed and set aside. Consequently, the demand notice dated 30.03.2022 issued by the respondent authorities under Section 144 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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