Assessment Order Overturned for Violating Natural Justice; New E-Filing Portal Issues Highlighted.

The HC set aside the assessment order and demand notice issued by the National Faceless Assessment Centre, citing a violation of natural justice principles due to inadequate response time and issues with the new e-filing portal. The Court found that the petitioner was not given a fair opportunity to respond to the show cause notice. The Assessing Officer was permitted to restart proceedings from the issuance stage of the show cause notice, with instructions to gather further information if necessary. The writ petition and pending applications were disposed of, with the judgment to be promptly uploaded and distributed.

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Issues:
Challenge to assessment order and demand notice based on violation of natural justice principles and non-compliance with e-filing portal directives.

Analysis:
The petitioner filed a writ petition challenging the assessment order and demand notice issued by the National Faceless Assessment Centre, Delhi under Section 143(3) read with Section 144B. The petitioner sought a stay on the demand arising from the assessment order. The counsel argued that the assessment order was passed without following the principles of natural justice. The compliance date for the show cause-cum-draft assessment order was 7th June 2021, as per the notification by the Directorate of Income Tax (Systems) and CBDT press release. However, the impugned assessment order was passed on 11th June 2021, which was deemed a violation of the directives.

The counsel further contended that due to the launch of a new income tax e-filing portal, the existing portal was discontinued from 1st June 2021, and the new portal did not function properly post-launch. This technical issue prevented compliance by the stipulated date of 7th June 2021, leading to the issuance of the impugned assessment order on 11th June 2021. The Court had issued notice to the respondents on 26th July 2021, and despite multiple adjournments, the respondents failed to provide satisfactory instructions.

The Court noted that the respondents had ample time to obtain instructions and declined further adjournment requests. Upon reviewing the case, the Court found that the impugned assessment order lacked adequate opportunity for the petitioner to respond to the show cause notice. The narrow timeframe provided in the notice, coupled with the dysfunctional e-filing portal, justified setting aside the assessment order. The Assessing Officer was granted liberty to resume assessment proceedings from the stage when the show cause notice was issued. The Court directed the Revenue to seek additional information if required before framing the Assessment Order, thereby disposing of the writ petition along with pending applications.

Finally, the Court ordered the immediate upload of the judgment on the website and the distribution of a copy to the counsel via email.

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