Delhi High Court: The Division Bench of Manmohan and Navin Chawla, JJ., noted the mandatory condition provided under Section 144B (7) of Income Tax Act, 1961.

Present petition challenged the Assessment order, notice of demand and notice of penalty passed under Section 143(3) read with Section 144B, Section 156 and Section 274 read with Section 271AAC(1) of the Income Tax Act, 1961 pertaining to the Assessment Year 2018-19.

Petitioner’s counsel submitted that there had been a breach of principles of natural justice, inasmuch as the respondent/revenue had failed to issue the mandatory Show Cause Notice-cum-draft assessment order to the petitioner/assessee, prior to the passing of the impugned assessment order.

Counsel for the Respondent-Revenue submitted that the final Assessment order had been passed without the issuance of a formal Show Cause Notice due to program and systematic glitches and he pointed out that the petitioner had been given ample opportunities and time for furnishing the requisite details and making submissions and hence there was no violation of principles of natural justice.

Analysis, Law and Decision

High Court opined that Section 144B (7) of the Income Tax Act, 1961 mandatorily provides for issuance of a prior show cause notice and draft assessment order before issuing the final assessment order.

Since in the present matter no prior Show Cause Notice, as well as assessment order, had been issued before passing the impugned assessment order, there was a blatant violation of principles of natural justice as well as the mandatory procedure prescribed in “Faceless Assessment Scheme” and as stipulated in Section 144 B of the Act.

Therefore, in the aforesaid facts, impugned assessment order, notice of demand and notice of penalty were set aside and the matter was remanded back to the Assessing Officer, who shall issue a draft assessment order and thereafter pass a reasoned order.

In view of the above, petition was disposed of. [Akashganga Infraventures India Ltd. v. National Faceless Assessment Centre, Delhi; WP (C) 5413 of 2021, decided on 4-08-2021]

Advocates before the Court: 

For the Petitioner: Mr Prakash Kumar, Advocate & Ms Rashmi Singh, Advocates

For the Respondent: Mr Zoheb Hossain, Sr. Standing Counsel for the Department

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