Supreme Court modifies decision on Assessment Order compliance, directs new order issuance

The Supreme Court granted leave to appeal against the High Court's decision setting aside an Assessment Order for non-compliance with Section 144B of the Income Tax Act, 1961. The Court held that the matter should have been remanded to the Assessing Officer for a fresh order, considering the absence of a show cause notice and draft Assessment Order. The Court modified the High Court's judgment, directing the Assessment Officer to issue a new Assessment Order in compliance with the Act and consider all defenses available to the assessee. The appeal was disposed of with instructions for corrective action by the Revenue.

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Issues involved:
The issues involved in the judgment include the High Court setting aside an Assessment Order for non-compliance with Section 144B of the Income Tax Act, 1961, and the question of whether the High Court should have remanded the matter to the Assessing Officer for a fresh order.

The Supreme Court granted leave to appeal against the impugned judgment of the High Court, which had set aside the Assessment Order due to the failure to issue a show cause notice with a draft Assessment Order as required by Section 144B of the Income Tax Act, 1961.

The Revenue contended that the High Court should not have entertained the writ petition challenging the assessment order, and if there was a breach of natural justice, the matter should have been remanded to the Assessing Officer to pass a fresh order in accordance with the law.

After considering the arguments of the Revenue and the respondent-assessee, the Supreme Court acknowledged that the Assessment Order was passed without the mandatory show cause notice and draft Assessment Order under Section 144B of the Act. The Court noted the recent introduction of the Faceless Assessment Scheme and opined that the Revenue should have been given an opportunity to rectify the error by remanding the matter to the Assessment Officer for a fresh order.

The Supreme Court modified the High Court's judgment and remanded the matter to the Assessment Officer to pass a fresh Assessment Order in compliance with Section 144B of the Act. The Court also directed that all contentions and defenses available to the assessee on merits should be considered by the Assessing Officer in accordance with the law.

The present appeal was disposed of with the above directions, allowing the Revenue to correct the procedural error and ensuring that the assessment is conducted in accordance with the legal requirements under the Income Tax Act, 1961.

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