Faceless assessment order under Section 143(3) read with Section 144B set aside for violating natural justice principles

Calcutta HC set aside a faceless assessment order under Section 143(3) read with Section 144B for violating principles of natural justice. The petitioner was denied opportunity to respond to additional show cause notice, constituting both statutory violation and breach of natural justice. The court held that such defects cannot be cured through appellate remedy. Matter remanded to Faceless Assessment Unit with directions to allow petitioner 15 days to respond and complete assessment within 10 weeks. Penalty notices under Sections 271AAD and 271B were quashed.

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Issues:
Challenge to assessment order under Income Tax Act, 1961 based on violation of principles of natural justice and statutory provisions.

Analysis:
The writ petition challenges an assessment order issued under Section 143(3) of the Income Tax Act, 1961, along with Section 144B, concerning the Assessment Year 2022-23. The petitioners argue that the additional show cause notice issued was in violation of statutory provisions as it was served before withdrawing the initial notice. They rely on a judgment by a coordinate Bench of the Calcutta High Court to support their claim. The petitioners contend that despite requesting a personal hearing and joining a video conference meeting, the Faceless Assessment Unit did not participate, leading to a perceived lack of opportunity for a personal hearing.

The respondents argue that the issue of whether the petitioner was given a hearing opportunity cannot be revisited based on the findings in the assessment order. They assert that the Assessing Officer had the authority to issue an additional show cause notice without withdrawing the initial notice. The respondents emphasize that the petitioner has an alternative remedy through an appeal and should not bypass it by resorting to writ jurisdiction.

The Court notes that the petitioner was not provided adequate time to respond to the additional show cause notice, as per the Standard Operating Procedure (SOP) guidelines. The Court finds that the assessment order was vitiated due to a violation of natural justice principles. It highlights that the petitioner's right to respond to the additional notice was denied, constituting a breach of statutory provisions and natural justice principles. The Court rules that the defect cannot be rectified by appealing and sets aside the assessment order.

The Court remands the matter to the Faceless Assessment Unit, directing them to allow the petitioner to respond to the additional show cause notice within 15 days. The Unit is instructed to activate the response submission button on the portal and schedule a virtual meeting for a hearing within 10 weeks. Consequently, the penalty notices issued on the same date as the assessment order are quashed. The writ petition is disposed of without costs, and parties may obtain a certified copy of the order upon request.

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