2021 (10) TMI 750 - HC - Income Tax

Court sets aside assessment order due to procedural non-compliance. Assessing Officer warned of costs for future lapses.

Mantra Industries Limited Versus National Faceless Assessment Centre (NFAC or NeAC) & Ors.

The court set aside the assessment order dated 8th June 2021 and associated notices, citing non-compliance with prescribed procedures under Section 144B ... Validity of assessment u/s 144 r.w.s. 144B - As argued assessment order is an exact reproduction of the draft assessment order except one sentence which has been added “Regarding this show cause notice issued to assessee on 22.04.2021 but assessee has not given any justification for non-furnishing of quantitative details in form 3CD' - HELD THAT:- As respondents have passed the assessment order without application of mind, without considering the two replies dated 23rd April 2021 and 27th April 2021 filed by petitioner and without considering the request for personal hearing also sought by petitioner. Strangely in the affidavit in reply filed by one Yashpal Singh affirmed on 29th July 2021, it is stated that “the noting records show that the submission dated 23rd April 2021 and 27th April 2021 both taken on record and considered”. But the assessment order does not reflect this. We wonder how does the affiant know something which the assessment order does not reflect. We have compared the details provided by petitioner and Form 35(b) annexed to the affidavit in rejoinder. We do not find any difference except that in the response dated 27th April 2021 the product manufactured, viz., Wet Grinders, is mentioned. We have to also note that this is not the case in the assessment order which has proceeded on the basis that no response at all has been filed to the notice dated 22nd April 2021. There cannot be anything far from truth. We are, therefore, compelled to set aside the impugned order dated 8th June 2021 and also the consequential notices. Issues:Impugning assessment order based on principles of natural justice violation.Analysis:The petitioner challenged the assessment order dated 8th June 2021, contending that it was passed without following the principles of natural justice. The petitioner's objections and requests for adjournment and personal hearing were allegedly not considered. The notice of demand and the penalty proceedings were initiated under specific sections of the Income Tax Act, 1961. The petitioner highlighted that their response to the show cause notice was not taken into account in the assessment order.The petitioner received a notice on 22nd April 2021, requiring a response by 24th April 2021 for the Assessment Year 2018-2019. Due to COVID-19 related issues, the petitioner requested a 20-day extension to provide the necessary details and objected to modifications in the draft assessment order. Despite filing responses on 23rd and 27th April 2021, the assessment order was issued on 8th June 2021, mirroring the draft order with an additional critical statement regarding the petitioner's failure to provide quantitative details.The court observed discrepancies between the respondent's claims in the affidavit and the actual assessment order. The respondent's justification for the assessment order not reflecting the petitioner's submissions was deemed inadequate. The court reviewed the quantitative details provided by the petitioner and found them to be substantially compliant with the prescribed format, contrary to the respondent's argument. The court emphasized the importance of considering all relevant submissions before finalizing an assessment order.Consequently, the court set aside the impugned order dated 8th June 2021 and associated notices, citing non-compliance with the prescribed procedure under Section 144B of the Income Tax Act, 1961. The Assessing Officer was directed to take appropriate steps in accordance with the law. The court refrained from commenting on the case's merits but warned against the continuation of such practices. The court threatened to impose substantial costs on the Assessing Officer and instructed the department to record such judicial orders in the officer's career records to ensure accountability. The petition was disposed of accordingly.