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

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 assessment order and providing an opportunity for a hearing via video conferencing. Emphasizing the importance of due process and natural justice, the court highlighted the necessity of adhering to statutory procedures, particularly in assessments conducted under the Faceless Assessment Scheme. The decision underscored the significance of procedural fairness and ensuring that the petitioner's rights were safeguarded through a proper hearing and adherence to legal requirements.

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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.

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