Faceless assessment procedure under section 144B requires a real opportunity to respond before adverse tax action is taken.

Faceless assessment under section 144B must follow the prescribed draft assessment and hearing procedure, and an assessee must be given a fair opportunity to respond to material relied on. The notices were treated as requests for further particulars rather than a genuine draft assessment order, the response time was unreasonably short, and the assessee's request for additional time and third-party summons was not addressed. The assessment was also based on material not confronted in the show-cause notices, indicating procedural infirmity and non-application of mind. The assessment order, demand notice and penalty show-cause notice were set aside, and the matter was remitted for fresh consideration.

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Issues: Whether the assessment order and consequential demand and penalty notice were liable to be set aside for non-compliance with the faceless assessment procedure under section 144B and for denial of a proper opportunity to the assessee.

Analysis: The notices issued in the faceless assessment process were not treated as a genuine draft assessment order but merely sought further details and documents. The assessee was given an unreasonably short time to respond, despite the notice being received later than its digital time-stamp, and had specifically sought time and issuance of summons to third-party lenders. The assessment order was nevertheless passed without dealing with that request and without issuing the mandatory draft assessment order contemplated by section 144B. The resultant order also proceeded on material not put to the assessee in the show-cause notices, showing procedural infirmity and non-application of mind.

Conclusion: The assessment order, the demand notice, and the penalty show-cause notice were set aside, and the matter was remitted for fresh consideration after following the prescribed procedure and granting an opportunity to the assessee.

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