Faceless assessment order quashed for failing to issue Section 144B notice and ignoring assessee's reply

The HC set aside a faceless assessment order under Section 144B for procedural violations. The tax authority failed to issue mandatory notice under Section 144B(1)(iii) informing the assessee of faceless assessment proceedings. Additionally, the authority violated Section 144B(1)(xi)-(xiv) by not considering the petitioner's reply dated 24.09.2021 before issuing the draft assessment order on 22.09.2021, and failed to issue required show cause notice. The court held these procedural lapses vitiated the entire proceedings and directed reassessment following proper Section 144B procedures.

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Issues Involved:

1. Maintainability of the Writ Petition due to availability of alternate remedy.
2. Non-furnishing of intimation under Section 144B(1)(iii) of the Income Tax Act.
3. Non-consideration of the petitioner's reply, violating Section 144B(1)(vii) read with (xiv) and (xvi)(b) of the Act.
4. Violation of procedure under Section 144B(1)(xi) to (xiv) of the Act.

Summary:

1. Maintainability of the Writ Petition:
The respondent argued that the writ petition is not maintainable due to the availability of an alternate remedy. However, the court noted that while a writ petition under Article 226 of the Constitution of India is generally not entertained if a statutory remedy is available, exceptions exist for violations of natural justice, lack of jurisdiction, or errors apparent on the face of the record.

2. Non-furnishing of Intimation under Section 144B(1)(iii):
The petitioner contended that the mandatory intimation under Section 144B(1)(iii) of the Act was not furnished, which is critical as it informs the assessee that the assessment would be made under the faceless assessment scheme. The court acknowledged the importance of this intimation, emphasizing that the term "shall" in the provision indicates its mandatory nature, impacting the obligations and rights of the assessee under the faceless assessment process.

3. Non-consideration of Petitioner's Reply:
The petitioner argued that its reply dated 22.09.2021 was not considered in the impugned order, violating the mandate of Section 144B(1)(vii) read with (xiv) and (xvi)(b) of the Act. The court found that the 1st Respondent issued a show cause notice cum draft assessment order on 22.09.2021 without considering the petitioner's reply, which was submitted the same day. This non-consideration vitiated the proceedings as it contravened the statutory requirements.

4. Violation of Procedure under Section 144B(1)(xi) to (xiv):
The court observed that the impugned order disregarded the procedure outlined in Section 144B(1)(xi) to (xiv) of the Act. Specifically, the draft assessment order was made without considering the petitioner's objections filed on 24.09.2021. The court highlighted that the assessment unit must take into account all relevant material before making a draft assessment order. The failure to do so rendered the proceedings invalid.

Conclusion:
The court set aside the impugned proceedings and allowed the respondent authority to reframe the assessment in accordance with the law, following the procedure under Section 144B of the Act. The writ petition was disposed of without costs, and connected miscellaneous petitions were closed.

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