TaxTMI 
TaxTMI 
2021 (12) TMI 313
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on 20.10.2018, it filed its return of income at loss of Rs. 16.34 Crores (rounded off). 2.2. During the financial year, 2018, two companies namely M/s.Gandhi Reality India Pvt. Ltd. and M/s. Crystal Organisers Pvt. Ltd. Were amalgamated with company named Ms/J.B. Realities Pvt. Ltd. by virtue of the order of the National Company Law Tribunal dated 22.10.2018. Then the name of the company was changed to the present petitioner named M/s.Gandhi Reality India Pvt. Ltd. 2.3. The case of the petitioner was selected for scrutiny. Notice u/s 143(2) of the Act was issued on 22.09.2019 to scrutinize the income from real estate business. Another notice u/s 142(1) of the Act was issued on 03.02.2021. On 07.10.2019, 07.01.2020, 03.03.2021 and 15.03.2021 the petitioner provided the basic information and requested for specific details to be supplied. 2.4. The respondent passed the assessment order without issuing any show cause notice to the petitioner on 20.04.2021 making addition of income on two issues totaling to Rs. 21,78,90,087/-. 2.5. According to the petitioner, the impugned order u/s 144(3) r.w.s. 144B of the Act being illegal, deserves quashment. 2.6. The prayer sought f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mpilation. 3.6. On 06.12.2019, the assessee again referred to the notice dated 22.09.2019 u/s.143(2) and requested for further time of 30 days for preparation. 3.7. Again on 07.01.2020, referring to the details supplied under its letter dated 07.10.2019, it inquired about further details to be supplied. 3.8. On 13.10.2020 the case of the assessee was transferred from A.O. to Regional E-Assessment Unit and on 15.10.2020 the assessee was informed about the transfer of the proceedings to National Faceless Assessment Centre ("NFAC" for short). 3.9. On 04.01.2021, communication was issued under section 142(1) serving notice upon the assessee by Regional Re-Assessment Unit. 3.10. Notice was issued on 03.02.2021 under section 142(1) by NFAC. 3.11.The assessee responded to the notice on 03.02.2021 and also communicated that the details required are under preparation and hence requested for adjournment for 7 days. 3.12. Point-wise communication had been submitted on 05.03.2021 along with the documents where details in relation to the loan and advances of GSM Enterprise had been supplied. 3.13. Thereafter, on 10.03.2021 adjournment request for a period of 5 days was m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s annexed with the petition. 4.2. The related provisions of section 144B and Circular dated 14.08.2019 obligating the requirement that every communication by the Income Tax Department to the assessee would bare a unique Document Identification Number ("DIN" for short) without which the communication is deemed to not exist, is pressed into service. Hence it is urged that what has been mandated under section 144B of the Act has not been complied with. 5. We have extensively heard submissions of learned advocate Mr.B.S. Soparkar. He has taken us through the pleadings, law on the subject and the scheme of the Act. He has also relied on the following three decisions : [1] Radha Krishan Industries Versus State of Himachal Pradesh and others, reported in 2021 SCC Online SC 334. [2] McKinsey & Co. Inc. Versus Union of India, reported in [2010] 324 ITR 367 (Bombay) and [3] Engineering Professional Co.(P). Ltd. Versus Deputy Commissioner of Income Tax, Circle1(1)(1), reported in [2020] 424 ITR 253 (Gujarat). 5.1. Mr.Soparkar has empathetically urged that there has been a reiterative emphasise on the part of the petitioner that the Draft Assessment order wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rporation Versus Registrar of Trade Marks, Mumbai & Others, reported in reported in (1998)1 SCC 1 has in detail considered the power to issue prerogative writ under Article 226 of the Constitution of India by holding that it is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, Mandamus, etc. for the enforcement of any of the fundamental rights contained in Part III of the Constitution but also for "any other purpose". The Apex Court held that the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. 7.2. This has been reiterated by the Apex Court in the case of Radha Krishan Industries Versus State of Himachal Pradesh reported in 21 SCC Online SC 334. Relevant paragraph reads thus : "27. Following the di....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alternate remedy is provided by law; (v) When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion; and (vi) In cases where there are disputed questions of fact, the High Court may decide to decline jurisdiction in a writ petition. However, if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with." 7.3. In the matter on hand, the petitioner has approached this court with an emphasise on clear violation of principles of natural justice and action in total disregard to the provisions of law which makes the end order non-est statutorily. Emphasizing the requirement of law on the statute after section 144B has been inserted. It is the case of the petitioner th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (b) conducting of certain enquiry or verification by verification unit; and (c) seeking technical assistance from the technical unit; (vi) where a request for obtaining further information, documents or evidence from the assessee or any other person has been made by the assessment unit, the National Faceless Assessment Centre shall issue appropriate notice or requisition to the assessee or any other person for obtaining the information, documents or by the assessment unit; (vii) the assessee or any other person, as the case may be, shall file his response to the notice referred to in clause (vi), within the time specified therein or such time as may be extended on the basis of an application in this regard, to the National Faceless Assessment Centre; (viii) where a request for conducting of certain enquiry or verification by the verification unit has been made by the assessment unit, the request shall be assigned by the National Faceless Assessment Centre to a verification unit in any one Regional Faceless Assessment Centre through an automated allocation system; (ix) where a request for seeking technical assistance from the tec....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... it may decide to- (a) finalise the assessment, in case no variation prejudicial to the interest of assessee is proposed, as per the draft assessment order and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee, along with the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment, or (b) provide an opportunity to the assessee, in case any variation prejudicial to the interest of assessee is proposed, by serving a notice calling upon him to show cause as to why the proposed variation should not be made; or (c) assign the draft assessment order to a review unit in any one Regional Faceless Assessment Centre, through an automated allocation system, for conducting review of such order; (xvii) the review unit shall conduct review of the draft assessment order referred to it by the National Faceless Assessment Centre whereupon it may decide to (a) concur with the draft assessment order and intimate the National Faceless Assessment Centre about such concurrence; or (b) suggest such variation, as it may deem fit, in the dr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed draft assessment order and send it to the National Faceless Assessment Centre; (xxv) the National Faceless Assessment Centre shall, upon receiving the revised draft assessment order,- (a) in case the variations proposed in the revised draft assessment order are not prejudicial to the interest of the assessee in comparison to the draft assessment order or the final draft assessment order, and- (A) in case the revised draft assessment order is in respect of an eligible assessee and there is any variation prejudicial to the interest of the assessee proposed in draft assessment order or the final draft assessment order, forward the said revised draft assessment order to such assessee; (B) in any other case, finalise the assessment as per the revised draft assessment order and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee. alongwith the demand notice, specifying the sum payable by chor refund of any amount due to, the assessee on the basis of order are prejudicial to the interest of the assessee in comparison to the draft assessment order or such assessment; (b) in case the variations pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....roceedings, if any, to the assessee, alongwith the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment; (xxxii) the National Faceless Assessment Centre shall, after completion of assessment, transfer all the electronic records of the case to the Assessing Officer having jurisdiction over the said case for such action as may be required under the Act. (2) The faceless assessment under sub-section (1) shall be made in respect of such territorial area, or persons or class of persons, or incomes or class of incomes, or cases or class of cases, as may be specified by the Board. (3) The Board may, for the purposes of faceless assessment, set up the following Centres and units and specify their respective jurisdiction, namely; (i) a National Faceless Assessment Centre to facilitate the conduct of faceless assessment proceedings in a centralised manner, which shall be vested with the jurisdiction to make faceless assessment; (ii) Regional Faceless Assessment Centres, as it may deem necessary, facilitate the conduct of faceless assessment proceedings in the cadre controlling r....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Commissioner or Deputy Director or Assistant Commissioner or Assistant Director, or Income-tax Officer, as the case may be; (c) such other income-tax authority, ministerial staff, executive or consultant, as considered necessary by the Board. (5) All communication among the assessment unit, review unit, verification unit or technical unit or with the assessee or any other person with respect to the information or documents or evidence or any other details, as may be necessary for the purposes of making a faceless assessment shall be through the National Faceless Assessment Centre; (6) All communications between the National Faceless Assessment Centre and the assessee, or his authorised representative, or any other person shall be exchanged exclusively by electronic mode; and all internal communications between the National Faceless Assessment Centre, Regional Faceless Assessment Centres and various units shall be exchanged exclusively by electronic mode: Provided that the provisions of this sub-section shall not apply to the enquiry or verification conducted by the verification unit in the circumstances referred to in subclause of clause (xii) o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t or revised draft assessment order, the assessee or his authorised representative, as the case may be, may request for personal hearing so as to make his oral submissions or present his case before the income-tax authority in any unit; (viii) the Chief Commissioner or the Director General, in charge of the Regional Faceless Assessment Centre, under which the concerned unit is set up, may approve the request for personal hearing referred to in clause (vii) if he is of the opinion that the request is covered by the circumstances referred to in sub-clause (h) of clause (xii); (ix) where the request for personal hearing has been approved by the Chief Commissioner or the Director General, in charge of the Regional Faceless Assessment Centre, such hearing shall be conducted exclusively through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony, in accordance with the procedure laid down by the Board; (x) subject to the proviso to sub-section (6), any examination or recording of the statement of the assessee or any other person (other than statement recorded in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... contained in sub-section (1) or sub-section (2), the Principal Chief Commissioner or the Principal Director General in charge of National Faceless Assessment Centre may at any stage of the assessment, if considered necessary, transfer the case to the Assessing Officer having jurisdiction over such case, with the prior approval of the Board. (9) Notwithstanding anything contained in any other provision of this Act, assessment made under subsection (3) of section 143 or under section 144 in the cases referred to in sub-section (2) [other than the cases transferred under sub section (8), on or after the 1st day of April, 2021), shall be non-est if such assessment is not made in accordance with the procedure laid down under this section. "[(10) Notwithstanding anything contained in this section, the function of verification unit under this section may also be performed by a verification unit located in any other faceless center set up under the provisions of this Act or under any scheme notified under the provisions of this Act; and the request for verification may also be assigned by the National Faceless Assessment Centre to such verification unit.] Explan....
X X X X Extracts X X X X
X X X X Extracts X X X X
...." shall have the same meaning as assigned to in clause (b) of sub-section (15) of section 144C; (n) "e-mail or electronic mail" and electronic mail message means a d message or information created or transmitted or received on a computer, computer system, computer resource or communication device including attachments in text, image, audio, video and any other electronic record, which may be transmitted with the message (o) "hash function" and "hash result" shall have the same meaning as assigned to them in the Explanation to sub-section (2) of section 3 of the Information Technology Act, 2000 (21 of 2000); (p) "Mobile app" shall mean the application software of the Income tax Department developed for mobile devices which is downloaded and installed on the registered mobile number of the assessee; (q) "originator" shall have the same meaning as assigned to it in clause (za) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000); (r) "real time alert" means any communication sent to the assessee, by way of Short Messaging Service on his registered mobile number, or by way of update on his Mobile App, or by wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of mindset. 7.07. This provision starts with non-obstant clause and it warrants service of notice to the assessee in case of scrutiny assessment under section 143(3) and 144(2) be replied to by the assessee in 15 days' time, after allocation through automated system to any Regional Faceless Centre. 7.08. For fulfilling the need of document etc. the request of an assessment unit from regional faceless centre also shall be through Faceless Assessment Centre. 7.8.1. Once there is a need to make reference to verification unit or technical unit, it is necessarily to be done through NFAC only and in absence of any response of assessee, the NFAC would serve a notice under section 144 of the I.T. Act as to why the best judgement assessment be not finalised and still if nor responsive, the concerned unit which is allocated the assessment would need to prepare draft assessment order to be sent to NFAC and even when information called for, in clause (xii) have been received, the draft assessment order needs to be prepared with or without variations as ends also specifying penalty, if any. 7.09. The National Faceless Assessment Centre shall examine the draft assessment order in a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arly provides that the assessment would be non-est if the said provision is not followed procedurally on or after 01.04.2021. This depicts a clear legislative intent that every step and stage of procedural requirement of this provision is needed to be regarded with matching seriousness. 8. The Orissa High Court in the case of Sribasta Kumar Versus Union of India and another in WP (c) No.29279 of 2021, was examining the issue where principal ground on which the assessment order had been challenged that was, that the mandatory requirement under section 144B of the Act has not been complied with prior to issuance of the assessment order, wherein the Court held thus: "5. It is obvious that in the present case the impugned assessment order was passed without communicating to the Petitioner any draft order of assessment under Section 144B of the IT Act. 6. In view of the clear legal position explained in the above judgments, on the above short ground this Court sets aside the impugned order of assessment dated 8th September, 2021 of the NFAC as well as all consequential notices/orders. The Court nevertheless grants liberty to the Department to pass a fresh assessment....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t to the scheme made under subsection (3A), by notification in the Official Gazette, direct that any of the provisions of this Act relating to account of total income or loo shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification Provided that no direction shall be issued after the 31st day of March, 2021, XXX (3D) Nothing contained in sub-section (3A) and sub-section (3B) shall apply to the assessment made under sub-section (3) or under section 144, as the case may be, on or after the 1st day of April, 2021) 9.2. Besides this, Mr. Vohra is also right in his contention that the CBDT notification dated 31.03.2021, to which, we have made a reference. hereinabove, also says, in effect, the same thing, i.c., that after 01.04.2021, the assessment order could have only have been passed in consonance with the provisions of Section 144B of the Act. 10. In view of the foregoing reasons, we are inclined to set aside the impugned assessment order dated 15.04.2021 as also the notice of demand issued under Section 156 of the Act and the notice for initiating penalty) proceedings issued under S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecide to - (a) finalise the assessment, in case no variation prejudicial to the interest of assessee is proposed, as per the draft assessment order and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee, along with the demand notice, specifying the sum payable by, or refund of any. amount due to, the assessee on the basis of such assessment; or (b) provide an opportunity to the assessee, in case any variation prejudicial to the interest of assessee is proposed, by serving a notice calling upon him to show cause as to why the proposed variation should not be made; or assign the draft assessment order to a review unit in any one Regional Faceless Assessment Centre, through an automated allocation system, for conducting review of such order. (9) Notwithstanding anything contained in any other provision of this Act, assessment made under sub-section (3) of section 143 or under section 144 in the cases referred to in sub-section (2) [other than the cases transferred under subsection (8)], on or after the 1st day of April, 2021, shall be non est if such assessment is not made in accordance with the procedure laid down under....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessment Centre and the assessee, or his authorised representative, or any other person shall be exchanged exclusively by electronic mode; and all internal communications between the National Faceless Assessment Centre, Regional Faceless Assessment Centres and various units shall be exchanged exclusively by electronic mode. The proviso would not be necessary to be discussed at this stage which concerns inquiry or verification conducted by the verification unit. 14. Sub-sections (7) of section 144B provides that for the purposes of faceless assessment an electronic record shall be authenticated by the National Faceless Assessment Centre by affixing its digital signature and by assessee or any other person, by affixing if required his digital signature if he is required under digital signature. 15. Sub-section (2) of section 114 (B) says that every notice or order or any other electronic communication shall be delivered to the addressee, being the assessee, by way of placing an authenticated copy thereof in the assessee's registered account; or by sending an authenticated copy thereof to the registered email address of the assessee or his authorised representative; or uploadin....