Court criticizes National Faceless Assessment Centre for arbitrary actions, orders stay on coercive measures.

The Court found that the respondents, including the National Faceless Assessment Centre, acted high-handedly and arbitrarily by adding a substantial amount to the petitioner's income without evidence. The Court criticized the respondents for disregarding legal principles and causing harassment to the assessee. Respondents were directed to explain why exemplary costs should not be imposed and to respond to the petition within specific timelines. The Court also ordered a stay on coercive actions until the next hearing to uphold fairness in the legal process.

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Issues:
1. Alleged high handedness and arbitrary exercise of powers by respondents in making an addition to petitioner's income.
2. Denial of basic principles of law and justice to the assessee.
3. Passing reassessment orders in a whimsical manner.
4. Need to address the prevailing situation causing prejudice to assessees and violation of basic legal principles.

Analysis:
The judgment delivered by the Hon'ble Surya Prakash Kesarwani and Hon'ble Deepak Verma, JJ. addresses various critical issues. Firstly, the Court observed that the respondents, including the National Faceless Assessment Centre, displayed high handedness and arbitrary exercise of powers by making a substantial addition of Rs.13,67,24,000/- to the petitioner's income for the assessment year 2017-18 without any material evidence of income escapement. The petitioner repeatedly informed the respondents about the absence of any deposits in the bank account, supported by bank statements, yet the addition was made, indicating a denial of basic principles of law and justice.

Moreover, the Court noted a deliberate attempt by the respondents to cause harassment to the assessee, showcasing a conscious disregard for the rule of law and justice. The judges expressed concern over the arbitrary nature of reassessment orders passed by the respondents, including the National Faceless Assessment Centre, highlighting a deviation from established legal principles, including natural justice. This approach was deemed prejudicial to assessees and a blatant violation of fundamental legal norms that require immediate intervention.

In response to the observed misconduct, the Court directed the respondents to file a counter affidavit explaining why exemplary costs should not be imposed, citing a precedent from a Supreme Court case. The respondent no.1 was specifically instructed to file a counter affidavit personally within three weeks. Additionally, all respondents were required to respond to the writ petition's paragraphs and the court's observations within one week based on a previous order dated 26.05.2022. The case was scheduled for further hearing on 05.07.2022 at 10 AM.

As an interim measure, the Court ordered that no coercive action should be taken against the petitioner based on the impugned reassessment order or demand until the next hearing date. This directive was to be communicated to the respondents by the learned counsels within 48 hours for compliance, emphasizing the importance of ensuring fairness and procedural justice in the legal proceedings.

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