Faceless assessment requires a show-cause opportunity before prejudicial variation; non-compliance makes the assessment unsustainable.

In faceless assessment under section 144B of the Income-tax Act, the National Faceless Assessment Centre must give the assessee an opportunity to show cause against any proposed variation prejudicial to its interest, and the scheme also contemplates a request for personal hearing after such notice. Where an assessment under section 143(3) is completed without granting that mandatory notice and opportunity, the assessment is vitiated for breach of statutory procedure and is liable to be set aside, with objections to be filed for fresh completion of assessment.

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Issues: Whether the assessment order could be sustained when, in a faceless assessment under section 144B of the Income-tax Act, 1961, the assessee was not given an opportunity to show cause against a proposed variation prejudicial to its interest.

Analysis: The statutory scheme under section 144B(1)(xvi)(b) requires the National Faceless Assessment Centre to afford the assessee an opportunity to show cause where a variation prejudicial to the assessee is proposed. Section 144B(7)(vii) also contemplates a request for personal hearing after such notice. Since the impugned assessment order under section 143(3) was made without granting the requisite opportunity on the proposed variation, the assessment suffered from breach of the statutory procedure.

Conclusion: The impugned assessment order was set aside for failure to grant the mandatory opportunity to show cause on the proposed variation, and the assessee was directed to file objections for fresh completion of assessment.

Ratio Decidendi: In faceless assessment, an assessment order made without the mandatory statutory opportunity to show cause against a prejudicial variation is unsustainable and liable to be set aside.

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