Non-furnishing of Draft Assessment Order in faceless income tax assessment results in quashing and remand for fresh consideration

Non-furnishing of the draft assessment order in a faceless income tax exercise amounted to denial of natural justice because the taxpayer's submissions and documents were not considered; consequence: the impugned assessment, revisional and rectification orders were quashed and set aside. The revisional authority also failed to consider the taxpayer's submissions in revision and in the rectification request; consequence: those orders were similarly quashed. The matter is remitted for de novo consideration, directing the assessing authority to consider all submissions and documents before passing a fresh order.

---

---

Issues: (i) Whether the Assessment Order dated 29th September 2021 passed by the National Faceless Assessment Centre is vitiated by non-furnishing of the draft assessment order and non-consideration of the assessee's submissions, warranting quashing and remand; (ii) Whether the amount deposited as a pre-condition for stay (Rs. 2,02,21,990/-) must be refunded with interest following quashing of the assessment and revisional orders.

Issue (i): Whether the impugned faceless assessment and the revisional orders stand vitiated by failure to furnish a draft assessment order and by non-consideration of the assessee's submissions.

Analysis: The impugned final assessment was passed after an ITAT remand. It is admitted that no draft assessment order was furnished to the assessee prior to the final order. The final assessment also did not deal with documents and written submissions filed by the assessee. The revisional authority likewise failed to address those submissions. These deficiencies engage principles of fair procedure and the statutory framework governing faceless assessments and post-remand proceedings.

Conclusion: The impugned Assessment Order dated 29th September 2021 and the revisional orders dated 13th January 2023 and 9th February 2023 are quashed and set aside. The matter is remanded to the National Faceless Assessment Centre for de-novo consideration of all submissions.

Issue (ii): Whether the pre-condition deposit of Rs. 2,02,21,990/- made for stay of demand must be refunded with interest in view of the quashing of the assessment and revisional orders.

Analysis: The deposit was made pursuant to a stay conditioned on the revisional order and assessment which have now been quashed. The quashing removes the basis for the conditioned stay and the pre-condition deposit taken under those orders.

Conclusion: The deposit of Rs. 2,02,21,990/- shall be refunded to the assessee along with interest as payable in law.

Final Conclusion: The assessment and revisional orders are set aside and the matter is remanded for fresh consideration; consequential refund with interest is directed. All other contentions are kept open for consideration on fresh proceedings.

Ratio Decidendi: Failure to furnish a draft assessment order and failure to consider an assessee's submissions in faceless assessment proceedings vitiate the assessment, requiring quashing and remand for de-novo consideration.

---