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.

Mantra Industries Limited Versus National Faceless Assessment Centre (NFAC or NeAC) & Ors. - [2022] 441 ITR 467 (Bom) 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.