Calcutta High Court: SOP issued by NaFAC for Faceless Assessment Enumerates the Format of Final Assessment Order that Authority must Follow

Calcutta High Court: SOP issued by NaFAC for Faceless Assessment Enumerates the Format of Final Assessment Order that Authority must Follow

The Calcutta High Court, while criticizing the decision-making process adopted by the Assessing Officer (AO) in passing the assessment order, stated that Standard Operating Procedure (SOP) under the Faceless Assessment framed under Section 144B of the Income Tax Act, 1961, issued by the National Faceless Assessment Centre (NFAC), Delhi under cover of a letter 3rd August, 2022, enumerated the procedure as to how the assessment has to be made.

The coram comprising of Justices T. S. Sivagnanam and Hiranmay Bhattacharyya observed that the procedure enumerates that the authority should ensure adherence to the principles of natural justice and reasonable opportunity to the assessee, timelines to be given for obtaining response to the show cause notice which have also been stipulated. Further, the SOP lays format of final assessment order in AU-9 which set out the various heads under which the assessment order has to be passed with due discussion.

In the present case, the petitioner/assessee challenged the assessment order on the ground that it was in total violation of the principles of natural justice. The assessment order has ignored all the formalities to be observed as enumerated under the SOP for faceless assessment orders.

The Court noted that on a cursory perusal of the assessment order dated 20th December 2022, which is impugned in the writ petition, one gets an impression that it is in compliance with the SOP as it contains requisite sub-headings but however, on a closure reading of the assessment order, it was seen that the assessing officer has acted in a most perverse manner in passing the assessment order.

The Court noted the format and observed that “the the first 21 pages of the assessment order is a verbatim extract of the show cause notice. In page nos.22 and 23 in two paragraphs the reply given by the assessee has been summarized. From page nos.23 to 36 of the assessment order it is once again extract of the show cause and ultimately at page nos.37 and 38 the total income has been determined and the assessment is completed.”

In this regard, the Court commented that, “the impugned assessment order is a classical example as to how an assessment should not be made. The assessing officer has reduced the procedure to an empty formality, which has to be deprecated.”

Accordingly, the Court quashed the assessment order.