2023 (11) TMI 651 - HC - Income Tax

Assessment order quashed for failing to supply reasons and draft order before show cause notice under Section 144B

Himgiri Mining And Projects Versus The National Faceless Assessment Centre, Govt. Of India

Himgiri Mining And Projects Versus The National Faceless Assessment Centre, Govt. Of India - [2024] 470 ITR 91 (Guj) Issues involved:The issues in this case involve the validity of the assessment order passed without providing reasons for reopening and the draft assessment order, as well as the demand notice for the assessment year 2013-14.Details of the Judgment:Issue 1: Reasons for Reopening and Draft Assessment OrderThe petitioner, a partnership firm, challenged the assessment order passed without the reasons for reopening being supplied. The petitioner argued that such an act is impermissible in the eyes of the law. The petitioner contended that the respondent failed to follow the mandatory requirement of supplying reasons for reopening and issuing a specific draft assessment order before passing the impugned assessment order. The petitioner's main prayer was to set aside the assessment order to have a proper opportunity to present the case before the assessing authority.Issue 2: Compliance and OpportunityThe Revenue argued that the petitioner did not respond to the notices under Section 142(1) of the Act and the show cause notice issued by the Assessing Officer during the assessment proceedings. The Revenue contended that the AO provided ample opportunities to the assessee and followed the principles of natural justice while passing the assessment order. The Revenue highlighted that the assessee did not file the return of income in response to the notice under Section 148 of the Act and did not request reasons during the assessment proceedings, thus relieving the AO from the obligation to supply reasons.Issue 3: Violation of Natural JusticeThe Court considered whether the assessment order passed under Section 147 read with Section 144B of the Act violated principles of natural justice by not providing reasons for reopening and a draft assessment order. Section 144B of the Act provides a detailed procedure for Faceless Assessment, including the requirement to provide reasons and a draft assessment order. The Court held that the impugned order was passed in violation of natural justice by not following the prescribed procedure for Faceless assessment.Conclusion:The Court allowed the petition, quashing the assessment order and demand notice. The Revenue was directed to proceed with the assessment under the provisions of section 144B of the Act, providing reasons for reopening and the draft assessment order to allow for a hearing. The Court emphasized that the exercise should be completed within 12 weeks from the date of the order. The Court clarified that it did not examine the merits of the case.