Supreme Court grants appeal on Assessment Order error under Income Tax Act

The Supreme Court granted leave to appeal against the High Court's judgment that declared the Assessment Order as non est due to the absence of a mandatory show cause notice with a draft Assessment Order under Section 144B of the Income Tax Act, 1961. The Court acknowledged the error but remanded the matter to the Assessment Officer for a fresh Assessment Order in compliance with the law, allowing all contentions and defenses to be considered on their merits. The appeal was disposed of accordingly.

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Issues involved:
The issues involved in the judgment are the validity of the Assessment Order under Section 144B of the Income Tax Act, 1961 and the High Court's decision to set aside the Assessment Order due to non-compliance with the mandatory requirement of issuing a show cause notice with a draft Assessment Order.

Validity of Assessment Order under Section 144B:
The Supreme Court granted leave to appeal against the High Court's judgment which declared the Assessment Order as non est for failing to issue the mandatory show cause notice with a draft Assessment Order as required under 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 under Article 226 of the Constitution of India. The Revenue argued that if the assessment proceedings were in breach of natural justice, the matter should have been remanded to the Assessing Officer to pass a fresh order in accordance with law and after following due procedure as mandated by Section 144B of the Act.

Decision and Remand by Supreme Court:
After hearing the arguments from both sides, the Supreme Court acknowledged that the Assessment Order was indeed passed without issuing the required show cause notice with a draft Assessment Order as mandated by Section 144B of the Act. While recognizing that the Faceless Assessment Scheme had been recently introduced, the Court believed that the Revenue should have been given the opportunity to correct the error. Consequently, the Court modified the High Court's judgment and remanded the matter to the Assessment Officer to pass a fresh Assessment Order in compliance with the law under 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 and on its own merits. As a result of this decision, the present appeal was disposed of.

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