While allowing a taxpayer’s writ petition against faceless assessment and quashing an order, a demand notice and a penalty notice issued by the income-tax (I-T) department, the Bombay High Court (HC) ruled that the officer who has passed the order for faceless assessment alone can file an affidavit-in-reply.
In an order passed last month, the division bench comprising justice KR Shriram and justice Amit B Borkar says, “...we have to hold that the assessment order has been issued without following the mandatory procedure prescribed under Section 144B of the (I-T) Act, inasmuch as, if the review unit of respondents had reviewed the draft assessment order, it should have followed the procedure laid down under sub-clause (b) of clause (xvi) of sub-section (1) of section 144B.”
Abacus Real Estate Pvt Ltd approached the HC against an assessment order, a demand notice and a penalty notice sent on 19 April 2021 for assessment year (AY) 2018-19 because the I-T department had failed and neglected to follow the mandatory procedure prescribed under Section 144B of the I-T Act.
The company submitted that the show-cause notice with a draft assessment order was not even sent to it by the I-T department.
The bench noted that the assessment order sent to Abacus Real Estate was totally silent about issuing any show-cause notice with the draft assessment order.
Akhileshwar Sharma, counsel for the I-T department, submitted that the draft assessment order was issued on 12 April 2021 and relied upon an affidavit in reply and a sur-rejoinder (a plaintiff's reply to the defendant's rejoinder) filed by one Jayshree Thakur.
The bench, however, rejected the submission saying, “We are not inclined to accept the explanation given by the affiant on behalf of respondents because if any such draft assessment order had been issued, that would have certainly found a mention in the assessment order impugned in the petition.”
The affidavit in reply stated that the draft assessment order under Section 143(3) of the Act was issued on 12 April 2021 by the assessing officer (AO) of the regional e-assessment unit to Abacus Real Estate.
Apart from the fact that it is Abacus Real Estate’s case that no such draft assessment order was received and no evidence that it has been served has been filed, it is the I-T department’s case in the affidavit in reply that the regional e-assessment unit issued the draft assessment order, the bench observed.
The bench says, “Provisions of section 144B in our view are mandatory provisions because sub-section 9 of section 144B states that if the assessment is not made in accordance with the procedure laid down under Section 144B, the assessment shall be non-est (the return of a writ or process).”
“Affidavit in reply has not been filed by the person who passed the assessment order. Even the counsel does not know who the faceless person who passed the assessment order is. The only person who could have answered this point categorically was the person who wrote and passed the assessment order and not some other officer who is relying upon input received from the national faceless assessment centre,” the HC says.
While quashing the assessment order, demand notice and penalty notice issued to Abacus Real Estate for AY18-19, the division bench says, “It is, however, open to respondents (I-T department) to take such steps as advised in accordance with the law for the purpose of making the faceless assessment.
“We also clarify that we have not made any observations on the merits of the case.”