Delhi High Court Sets Aside Assessment Order For Non-Compliance Of Faceless Assessment Scheme Provisions

Delhi High Court Sets Aside Assessment Order For Non-Compliance Of Faceless Assessment Scheme Provisions

The matter was remanded to the Assessing Officer with a direction to issue a draft assessment order and pass a reasoned order in accordance with the law

The Delhi High Court has set aside an assessment order for non-compliance of Section 144B(1)(xvi)(b) of the Income Tax Act, 1961 which violated mandatory procedure prescribed under 'Faceless Assessment Scheme'.

A Division Bench of the High Court of Delhi, comprising Justices Manmohan and Navin Chawla, dealt with this matter titled Javin Construction Private Limited v National Faceless Assessment Centre & Ors.

There was no factual matrix involved and the matter was purely dealt with on the legal provisions of the Income Tax Act, 1961. The Petitioner – Company had challenged the assessment order, notice of demand, show-cause notice for the imposition of penalty u/S. 274 read with Section 271AAC(1) and penalty u/S 274 read with Section 270A of the Income Tax Act, 1961. The Petitioner contended that the assessment order was passed without issuing a show-cause notice and draft assessment order which was mandated under Section 144B(1)(xvi)(b) of the Act, which violated the principles of natural justice.

The Respondent – Authorities pleaded for adjournment. The Court, however, declined the said request by noting that a number of matters on the same issue had been disposed of by this Court.

The bench reproduced the relevant provisions of Section 144B(1)(xvi)(b) and Section 149 of the Act. It was observed by the Court that Section 144B(1)(xvi)(b) of the Act, mandatorily provides for issuance of a prior show-cause notice and draft assessment order before issuing the final assessment order.

The Court noted that in the present case no prior show-cause notice as well as draft assessment order was issued, which violated the principles of natural justice as well as the mandatory procedure prescribed under 'Faceless Assessment Scheme'.

The Court, thus, set aside the above-stated assessment order, notice of demand, show cause notice for the imposition of penalty u/S 274 read with Section 271AAC(1) and penalty u/S 274 read with Section 270A of the Income Tax Act, 1961. The matter was remanded to the Assessing Officer with a direction to issue a draft assessment order and thereafter pass a reasoned order in accordance with the law.