2021 (7) TMI 1044 - HC - Income Tax

Court remands assessment order, emphasizes due process & natural justice under Faceless Assessment Scheme

Interglobe Enterprises Private Limited Versus National Faceless Assessment Centre Delhi (Earlier National E-Assessment Centre Delhi) & Anr.

The court set aside the assessment order and notice of demand for AY 2018-19, remanding the matter back to the Assessing Officer for issuing a draft ... Faceless Assessment u/s 144B - as argued no prior show cause notice as well as draft assessment order issued - HELD THAT:- As no prior show cause notice as well as draft assessment order had been issued and no hearing had been given before passing the impugned assessment order, there is a blatant violation of principles of natural justice as well as mandatory procedure prescribed in “Faceless Assessment Scheme” and stipulated in Section 144B of the Act. It is also settled law that an alternative statutory remedy does not operate as a bar to maintainability of a writ petition where the proceeding is carried out in violation of principles of nature justice – like in the present case. Thus matter is remanded back to the Assessing Officer, who shall issue a draft assessment order and grant an opportunity of hearing to the petitioner by way of Video Conferencing and thereafter pass a reasoned order. Issues involved:Challenge to assessment order under Section 143(3) read with Section 143(3A) and 143(3B) for AY 2018-19, violation of principles of natural justice, maintainability of writ petition despite alternative remedy available.Analysis:1. Challenge to Assessment Order:The petitioner filed a writ petition challenging the assessment order under Section 143(3) read with Section 143(3A) and 143(3B) dated 09th April, 2021, along with the notice of demand under Section 156 of the Income Tax Act, 1961 for AY 2018-19. The petitioner argued that the assessment order was illegal, passed without application of mind, and against the principles of natural justice. The petitioner contended that the order was finalized without issuing a prior notice, draft assessment order, or an opportunity to be heard, which are essential procedural requirements.2. Violation of Principles of Natural Justice:The respondent argued that the writ petition was not maintainable as the petitioner had an alternative remedy by filing an appeal. However, the court held that the assessment by the National Faceless Assessment Centre must adhere to the prescribed procedure and cannot follow the previous regime's process. Section 144B(7) mandates the issuance of a prior show cause notice and draft assessment order before finalizing the assessment. The court noted that in the present case, no such notice or hearing was provided, leading to a violation of natural justice and the Faceless Assessment Scheme's procedures.3. Maintainability of Writ Petition:The court reiterated that an alternative statutory remedy does not bar the maintainability of a writ petition when proceedings violate principles of natural justice. In this case, the absence of a prior show cause notice and draft assessment order, along with no opportunity for a hearing, constituted a violation of natural justice, justifying the writ petition despite the availability of an appeal process.4. Decision and Remand:Considering the facts and legal requirements, the court set aside the impugned assessment order and notice of demand for AY 2018-19. The matter was remanded back to the Assessing Officer, directing the issuance of a draft assessment order and granting an opportunity for a hearing via video conferencing. The Assessing Officer was instructed to pass a reasoned order in accordance with the law. The court disposed of the writ petition with these directions, emphasizing the importance of following due process and natural justice in assessments.5. Conclusion:The court's decision highlighted the significance of procedural fairness and adherence to statutory requirements in assessments conducted by the Faceless Assessment Scheme. By setting aside the assessment order and emphasizing the need for a proper hearing and draft assessment order, the court ensured that the petitioner's rights were protected and due process was followed in line with the law.This detailed analysis of the judgment provides a comprehensive understanding of the issues involved, the arguments presented, and the court's decision, ensuring clarity on the legal aspects and implications of the case.