2025 (2) TMI 547 - HC - Income Tax

Assessment order under sections 147 and 144B upheld despite challenge over section 151 approval requirements

Awadh Kishor Singh Versus National Faceless Assessment Centre, Principal Commissioner of Income Tax- 1, Income Tax Officer, Ward 1 (1), Muzaffarpur

The HC dismissed the writ petition challenging an assessment order passed under section 147 read with section 144B for lack of proper approval under ... Validity of assessment order passed u/s 147 r.w.s. 144B - No due approval u/s 151 accorded - HELD THAT:- A perusal of the documents would show that in the proposal for scrutiny, reasons for selection are duly recorded. Range Head and CIT/PCIT have also stated in their approval order that they are satisfied with the reasons recorded by the assessing officer and it is a fit case for issuing notice u/s 148. We, therefore, find that there is a due approval u/s 151 of the Act of 1961. On perusal of the details as available in the computersheet of order detail, we find that in course of faceless assessment at every stage approval from competent authorities have been obtained. Prima-facie, we do not find it a case of jurisdictional error, hence this Court would refrain from exercising it’s extraordinary writ jurisdiction in the present case. Petitioner has already chosen to avail alternative remedy in respect of the assessment year 2013-14. If so advised, he may avail the remedy of appeal, subject, however, to the limitation. While considering any application for condonation of delay, the period spent by the petitioner before this Court in the present writ application shall be liable to be condoned. 1. ISSUES PRESENTED and CONSIDEREDThe core legal issues considered in this judgment are:(i) Whether the assessment order dated 03.03.2022, passed under Section 147 read with Section 144B of the Income Tax Act, 1961 for the assessment year 2014-15, was made without compliance with statutory provisions and without granting adequate opportunity of being heard, thereby rendering it without jurisdiction.(ii) Whether the procedural requirements under Section 144B, as it stood prior to its amendment by the Finance Act, 2022, were complied with during the faceless assessment process.(iii) Whether the petitioner has an alternative remedy of appeal, and whether the court should exercise its writ jurisdiction given the availability of such a remedy.2. ISSUE-WISE DETAILED ANALYSISIssue (i): Compliance with statutory provisions and opportunity of hearingRelevant legal framework and precedents: The petitioner challenged the assessment order under Section 147 read with Section 144B of the Income Tax Act, 1961, arguing that statutory procedures were not followed, particularly those outlined in Section 144B, which governs faceless assessments. The petitioner relied on precedents such as the Supreme Court's decision in Calcutta Discount Co. Ltd. vs. Income Tax Officer and the Delhi High Court's decision in Capital Broadways Pvt. Ltd. vs. Income Tax Officer to argue for the necessity of procedural compliance and adequate reasoning in administrative decisions.Court's interpretation and reasoning: The Court examined the procedural history of the case, noting that multiple notices under Sections 148 and 142(1) were issued to the petitioner, who failed to respond. The Court found that the National Faceless Assessment Centre (NFAC) followed the statutory procedure by issuing notices and a draft assessment order, which the petitioner did not contest.Key evidence and findings: Notices were duly served on the petitioner's registered email, and the petitioner failed to respond to any of them. The NFAC proceeded with an ex-parte assessment due to non-compliance by the petitioner.Application of law to facts: The Court found that the procedural requirements under the Income Tax Act were met, as the petitioner was given ample opportunity to respond to the notices and draft assessment order.Treatment of competing arguments: The petitioner argued that the assessment was made without jurisdiction due to non-compliance with Section 144B procedures. However, the Court found that the NFAC had followed the requisite procedures, and the petitioner's non-compliance led to the ex-parte assessment.Conclusions: The Court concluded that the assessment order was not without jurisdiction, as the statutory procedures were followed, and the petitioner was given adequate opportunity to be heard.Issue (ii): Compliance with Section 144B proceduresRelevant legal framework and precedents: Section 144B outlines the procedure for faceless assessments, including the issuance of notices, draft orders, and opportunities for the assessee to respond.Court's interpretation and reasoning: The Court reviewed the steps taken by the NFAC and found that the procedures under Section 144B, as it existed prior to the Finance Act, 2022, were adhered to. The NFAC issued notices and a draft assessment order, and the petitioner failed to respond.Key evidence and findings: The Court noted that the NFAC followed the procedural steps, including obtaining necessary approvals and serving notices to the petitioner.Application of law to facts: The Court applied the procedural requirements of Section 144B to the facts and found that the NFAC acted within its jurisdiction and followed the law.Treatment of competing arguments: The petitioner argued that the NFAC did not comply with Section 144B, but the Court found that the NFAC's actions were consistent with the statutory requirements.Conclusions: The Court concluded that the NFAC complied with the procedural requirements of Section 144B, and the assessment was valid.Issue (iii): Availability of alternative remedyRelevant legal framework and precedents: The principle of alternative remedy suggests that a writ petition may not be entertained if an adequate alternative remedy is available, unless exceptional circumstances justify the exercise of writ jurisdiction.Court's interpretation and reasoning: The Court noted that the petitioner had an alternative remedy of appeal against the assessment order and had previously availed such remedy for the assessment year 2013-14.Key evidence and findings: The Court observed that the petitioner had withdrawn a similar writ application for the previous assessment year to pursue an appeal.Application of law to facts: The Court found that the availability of an alternative remedy of appeal was a significant factor in deciding whether to exercise writ jurisdiction.Treatment of competing arguments: The petitioner sought relief through writ jurisdiction, but the Court emphasized the availability of an appellate remedy.Conclusions: The Court concluded that the petitioner should pursue the alternative remedy of appeal, subject to the condonation of delay for the time spent in the writ proceedings.3. SIGNIFICANT HOLDINGSCore principles established: The Court reiterated the importance of following statutory procedures in tax assessments and emphasized the necessity of availing alternative remedies before seeking writ relief.Final determinations on each issue: The Court determined that the assessment order was valid and complied with statutory procedures. The petitioner was advised to pursue the alternative remedy of appeal.The writ application was disposed of, allowing the petitioner to seek appellate remedies, with the period spent in writ proceedings to be considered for condonation of delay.