TMI Blog2022 (10) TMI 422X X X X Extracts X X X X X X X X Extracts X X X X ..... as Section 144C provides for a separate and distinct scheme of assessment and the issuance of a DAO is part of that scheme. Though failure to issue the notices as provided in Section 144B would certainly vitiate the proceedings as being in violation of the principles of natural justice, it is an infirmity that may be cured by permitting such SCN/DAO to be issued now. The impugned assessments are set aside and liberty granted to the respondents to complete the assessments de novo, in accordance with law. We find overwhelming support from the following cases wherein the failure to issue a SCN/DAO has been construed as a procedural irregularity. The impugned orders of assessment are set aside and respondents granted liberty to issue SCN/DAO within a period of four (4) weeks from date of receipt of copy of this order. - W.P.Nos.16373, 14373, 13239, 12696, 13339, 12421, 12845, 10895, 9256 And 10687 of 2021 & 14417 of 2022 - - - Dated:- 30-9-2022 - WMP.No.70 13644 of 2022, 17349, 15288, 15285, 18111, 17346, 14046, 14049 18160, 13490, 13492, 17218, 14170, 14172, 23953, 13204, 13206, 13642 13644 of 2021, 11531, 11529 of 2021, 9810, 9811, 11315, 11316 and 27247 of 2021 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Sections 143(2)/142(1) were issued. 7. The petitioner has set out in the writ petition a detailed tabulation of the dates of notices and its replies thereto. Sometime in October, 2020, the petitioner received intimation that the assessment was to be completed under the Faceless Assessment Scheme which requires prior to completion of assessment, the issuance of a Show Cause Notice (SCN)/Draft Assessment Order (DAO). 8. In this case, as per the counter, the petitioner was given numerous opportunities to substantiate its claim and details of the notices issued have also been set out in the counter. According to the respondents, despite ample opportunity having been afforded, only two replies were received from the petitioner, though requests for adjournment were periodically made. 9. As in other cases, the respondents do not specifically address the violation of non-issue of SCN/DAO, and merely aver to the position that the impugned order is statutorily amenable to appeal. Since several notices were issued to the petitioner, they pray that the petitioner be relegated to first appeal. 10. In W.P.No.14417 of 2022, the petitioner challenges an order of penalty consequent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted for completion was inadequate. 16. That apart, they state that, despite the petitioner submitting that objections would be filed within three days, the response was filed beyond the period of three days, on 19.04.2021. The very averments in counter reveal that response dated 19.04.2021 has been received by the officer. 17. Thus, in the interest of substantial justice and seeing as the time originally granted to the petitioner to respond was only 24 hours, I am of the considered view that the passing of the impugned assessment order without reference to the petitioner or granting it effective opportunity of hearing cannot be accepted. The impugned order is set aside. 18. The petitioner is granted a period of four weeks from the date of receipt of this order to file its reply with supporting documents, if any. For the aforesaid purpose, the website will be enabled by the respondent. Thereafter, the petitioner shall be heard and an order of assessment shall be passed de novo within a period of four weeks from the date of personal hearing. 19. In any event, the entirety of the exercise shall not exceed 90 days from the date of receipt of certified copy of this or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is engaged in the manufacture of industrial chemicals and is stated to be a regular assessee to Income tax. A return was filed in respect of AY 2018-19 and notice was issued by the officer for initiation of proceedings and scrutiny. Notice under Section 143(2) dated 23.09.2019 for verification of certain enumerated issues was followed by questionnaires under Section 142(1) on various dates proposing disallowances to the return filed. 26. Time was granted till 06.04.2021 to file response. The last notice was issued on 31.03.2021. While it does not appear that the petitioner had responded to the earlier notices, in response to the last notice dated 06.04.2021, a request for adjournment was filed citing the difficulties posed by the pandemic. 27. While this is so, the impugned order of assessment has come to be passed in terms of Section 143(3) r/w.144B without, according to the petitioner, considering the e-response filed on 19.04.2021. In counter, on the question of natural justice, the respondents point out that the petitioner had not availed several opportunities that had been afforded and whatever submissions had been made were incomplete. 28. In fine, the respondents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 30.12.2020. 36. Admittedly, the petitioner tarried and furnished a reply only on 30.01.2021. In response, a further notice questionnaire under Section 142(1) was received on 01.03.2021 calling for a reply on or before 06.03.20221. The petitioner complied in time and also, specifically sought a personal hearing. No further notice was received and impugned assessment order has come to be passed straightaway on 24.04.2021. 37. Apart from the objection raised by the petitioner in regard to violation of principles of natural justice and non-adherence to the procedure set out under the e-assessment scheme, the petitioner also points out that there are variations between the issues that have been raised in notices and those that the officer has addressed in the impugned order. W.P.No.10895 of 2021 : 38. The petitioner is a company and challenges an order of final assessment for AY 2018-19 dated 08.04.2021. Pursuant to a return of income filed within time, proceedings were initiated for limited scrutiny, for verification of expenditure incurred for earning exempt income. Notices and questionnaires were issued, to which, the petitioner claims to have replied. 39.While t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Standard Operating Procedure (SOP) that has been devised in collaboration with the Directorate of Systems and as approved for the purpose of implementation of the Faceless Assessment Scheme, 2019 has been adhered to, faithfully. 47. The respondents take the defence that the procedure adopted is in order and that the provisions do not envisage issuance of a draft assessment order to an assessee. For this purpose, they rely on sub-clauses (xiv) and (xvi) of Section 144B to state that, it was only when a modification was proposed that an opportunity was to be extended to the assessee. 48. The common submissions advanced by the learned counsels for the petitioners are that the Faceless Assessment Scheme specifically requires a show cause notice/draft assessment order to be issued by the Assessment Units setting out the final proposals, based upon which, assessments are intended to be finalised. In none of the cases, barring W.P.No.14373 of 2021, has a show cause notice/draft assessment order been issued. 49. This Court has had occasion to deal with instances of violation of principles of natural justice in the framing of faceless assessments. Based upon the consensus arr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nguish the order in the case of Vijay Television Pvt. Ltd. and others (supra) pointing out that it was rendered in the context of Section 144 C of the Act which contemplates an entirely different scheme of assessment. 55. As for the decision in Mantra Industries (supra) relied upon by the petitioners, they point out that the Hon ble Supreme Court has stayed the order of the High Court as reported in National Faceless Assessment Centre vs Mantra Industries Ltd [2022 137 taxmann.com 210 SC]. However, a perusal of the order as aforesaid reveals that the stay relates only to the observations made by the Bench in paragraph 9 of the order, extracted below: '9.Respondents are put to notice, and Mr.Sharma to circulate this order right from the Revenue Secretary to everybody in the Finance Ministry, that if such orders are continued to be passed, this Court will be constrained to impose substantial costs on the concerned Assessing Office to be recovered from his/her salary and also direct the department to place such judicial orders in the career records of such Assessing Officer.' 56. Heard learned counsel. The objects and reasons on the basis of which the Faceless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The relevant clauses in Section 144B, to the extent they are relevant to decide the issue on hand, are extracted below: 144B. Faceless Assessment. - Notwithstanding anything to the contrary contained in any other provision of this Act, the assessment, reassessment or recomputation under sub-section (3) of section 143 or under section 144 or under section 147, as the case may be, with respect to the cases referred to in sub-section (2), shall be made in a faceless manner as per the following procedure, namely:- (xvii) the review unit shall conduct review of the income or loss determination proposal assigned to it by the National Faceless Assessment Centre, under sub-clause (b) of clause (xvi), whereupon it shall prepare a review report and send the same to the National Faceless Assessment Centre; (xviii) the National Faceless Assessment Centre shall, upon receiving the review report under clause (xvii), forward the same to the assessment unit which had proposed the income or loss determination proposal; (xix) the assessment unit shall, after considering such review report, accept or reject some or all of the modifications proposed therein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed. The High Court had held that failure to issue a notice under Section 143(2) was only a procedural irregularity, and one that could be dispensed with. 62. The respondents sought to take benefit of the position that Section 158BC specifically referred to certain provisions of the Income Tax Act that were required to be followed by the assessing officer and pointed out that there were no reference therein to a notice under Section 143(2). In that context, the High Court accepted the contention of the assessee that failure to issue a notice under Section 143(2) was fatal to the assessment. 63. In appeal by the Revenue, the Apex Court held that since an assessment had necessarily to be framed under Section 143(3), as a consequence, a notice under Section 143(2) was also mandatory. This Court, in the cases of Sapthagiri Finance Investments and Alstom T D India Ltd., (supra) has held to similar effect. 64. This Court in the case of Vijay Television Private Ltd. and Ors (supra) considered the impact of non-issue of a notice under Section 144C. In my view, notices under Sections 143(2) and 144C stand on a different footing and cannot be equated with a SCN/DAO, to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sanjay Aggarwal Vs. National Faceless Assessment Centre, Delhi [W.P.(C) 5741/2021] order dated 02.06.2021 (viii) Interglobe Enterprise Pvt. Ltd. Vs. National Faceless Assessment Centre [2021 (130) taxmann.com 54 Delhi] (ix) Javin Construction Pvt. Ltd. Vs. National Faceless Assessment Circle [2021 (130) taxmann.com 430 (Delhi] (x) Faqir chand Vs National E-Assessment Centre, Delhi [130 taxmann.com 323] Orissa High Court (i) Orissa Stevedores Ltd. Vs. Union of India [2021 (128) taxmann.com 163 (Orissa)] Andhra Pradesh High Court (i) Mudar Sudheer Vs Union of India [138 taxmann.com 47] 67. The impugned orders of assessment, barring the order in W.P.No.14373 of 2021 that has been dealt with in paragraphs 11 to 19 of this order, are set aside and respondents granted liberty to issue SCN/DAO within a period of four (4) weeks from date of receipt of copy of this order. Let responses be sought, the petitioners heard and orders of assessment be passed de novo. The entirety of the exercise shall not exceed a period of sixteen (16) weeks from the date of receipt of copy of this order. 68. These Writ Petitions are allowed, connected Miscellaneou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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