Reassessment Before 31-03-2022 Valid Despite s.144B Bypass, NFAC Must Decide Remaining Issues Afresh Per CBDT Circular

ITAT Agra held that the NFAC erred in treating as non est the reassessment order passed by the Jurisdictional Assessing Officer. Relying on CBDT Circular F.No.187/3/2020-ITA-1 dated 17-03-2022, the Tribunal held that the JAO was validly exempted from following the procedure under s.144B for reassessments due by 31-03-2022, and therefore the reassessment could not be annulled on that ground. As the NFAC had not examined the assessee's other grounds on merits, ITAT restored the matter to NFAC for de novo adjudication, allowing the revenue's appeal for statistical purposes.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether delay of 846 days in filing the appeal by the revenue deserved condonation.

1.2 Whether the assessment order passed under sections 144/147 by the Jurisdictional Assessing Officer was non est for want of compliance with section 144B and the CBDT Instruction dated 31-03-2021.

1.3 Whether the subsequent CBDT Order dated 17-03-2022 under section 119 created a valid exception permitting completion of the assessment by the Jurisdictional Assessing Officer without following the faceless assessment procedure.

1.4 Consequentially, whether the matter required remand to the appellate authority for adjudication of remaining grounds on merits.

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2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Condonation of delay in filing the appeal

Interpretation and reasoning

2.1 The Tribunal noted that there was a delay of 846 days in filing the revenue's appeal. Reasons for delay were set out in a condonation petition. Considering these reasons, the Tribunal applied the principle of substantial justice.

Conclusions

2.2 The delay of 846 days was condoned and the appeal was admitted for adjudication.

Issue 2 and 3: Validity of assessment by Jurisdictional Assessing Officer in light of section 144B, CBDT Instruction dated 31-03-2021, and CBDT Order dated 17-03-2022

Legal framework as discussed

2.3 The appellate authority had relied on CBDT Instruction F. No. 187/3/2020-ITA-I dated 31-03-2021, issued under section 144B(2), which mandated that all assessment proceedings pending as on 31-03-2021 and initiated on or after 01-04-2021 (other than specified exclusions) shall be completed in a faceless manner under section 144B, including cases where the assessee had not furnished returns in response to notices under sections 142(1) or 148(1). It had also taken note of sub-section (8) of section 144B regarding transfer of cases from faceless assessment to jurisdictional Assessing Officer with prior approval of the Board.

2.4 The Tribunal considered the CBDT Order F. No. 187/3/2020-ITA-1 dated 17-03-2022 issued under section 119, which, in partial modification of the earlier orders, added an exception that assessment orders in all cases for which the time limit for completion expires on 31-03-2022, and which were pending with the jurisdictional Assessing Officer as on 15-03-2022 or thereafter, and which could not be completed as per the procedure under section 144B due to technical/procedural constraints, shall be completed by the jurisdictional Assessing Officer. This exception was stated to apply only to cases where the time limit expired on 31-03-2022.

Findings of the appellate authority (NFAC) as noticed by the Tribunal

2.5 The appellate authority held that the reassessment was pending as on 01-04-2021 and therefore mandatorily had to be completed under the faceless assessment system in terms of section 144B and the CBDT Instruction dated 31-03-2021. It observed that the assessment had instead been completed by the Jurisdictional Assessing Officer (ITO, Ashok Nagar), there was no material to show transfer from faceless assessment to the Jurisdictional Assessing Officer with prior Board approval under section 144B(8), and no response was received from the Assessing Officer despite remand being called for on the jurisdiction issue. It therefore treated the assessment order dated 30-03-2022 as non est and void ab initio for gross violation of CBDT instructions and the mandate of section 144B, and did not adjudicate other grounds as academic.

Tribunal's interpretation and reasoning

2.6 The Tribunal recorded the factual sequence that notice under section 148 was issued and served on 30-03-2021, no return was filed, information was gathered under section 133(6), a show-cause notice with draft order was issued on 24-03-2022, reply was filed on 26-03-2022, and the reassessment under section 144 read with section 147 was completed by the Jurisdictional Assessing Officer on 30-03-2022.

2.7 The Tribunal took note of the CBDT Order dated 17-03-2022 and held that by virtue of this later order, the Board had granted relaxation in respect of reassessments to be completed by 31-03-2022, by specifically providing an exception from following the procedure laid down in section 144B for such cases and authorizing completion by the Jurisdictional Assessing Officer.

2.8 On this basis, the Tribunal concluded that the appellate authority's view that the assessment was non est for not having been carried out under section 144B was inconsistent with the subsequent CBDT relaxation which squarely covered assessments whose limitation period expired on 31-03-2022 and which were pending with the Jurisdictional Assessing Officer.

Conclusions

2.9 The Tribunal held that the declaration of the assessment as non est by the appellate authority on the ground of non-compliance with section 144B and the earlier Instruction dated 31-03-2021 was not in order in view of the CBDT Order dated 17-03-2022. The finding of non est and void ab initio assessment was set aside.

Issue 4: Remand for adjudication of remaining grounds on merits

Interpretation and reasoning

2.10 Since the appellate authority had quashed the assessment on jurisdiction/validity grounds and had not adjudicated the other grounds raised by the assessee on merits, the Tribunal considered it appropriate, in the interest of justice and fair play, to remit the matter back for fresh adjudication of those remaining issues.

2.11 The Tribunal directed that the remand was for a limited purpose: adjudication of other grounds and issues raised by the assessee, including any additional grounds or additional evidence that may be filed, but excluding reconsideration of the specific ground on which the assessment had earlier been held non est. It clarified that the appellate authority would be free to entertain and decide any other legal issues raised by the assessee.

Conclusions

2.12 The appeal was allowed for statistical purposes. The matter was restored to the file of the appellate authority for denovo adjudication, confined to grounds other than the validity of the assessment on the basis of section 144B non-compliance, with a direction to the assessee to cooperate and avoid unwarranted adjournments.

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