TaxTMI 
TaxTMI 
2022 (1) TMI 1289
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.... authorities. 2. The case made out by the writ applicant may be summarized thus: 2.1 The writ applicant had filed its return of income on 27.10.2018 thereby declaring his total income of Rs.85,03,090/-. The case of the writ applicant was selected for scrutiny under Computer Assisted Scrutiny Selection (hereinafter referred to as 'CASS') in the limited scrutiny category to verify the unsecured loans as well as the personal expenditure made by the applicant during the relevant assessment year. Accordingly, notice under section 143(2) of the Act, came to be served upon the writ applicant on 23.09.2019 followed by notices issued from time to time under Section 142(1) of the Act. 2.2 On 06.04.2021, draft assessment order came to be passed by the respondent authority under Section 144B(xiv) whereby show cause notice was also served as to why the assessment order should not be finalized in terms of draft assessment order. The writ applicant had submitted exhaustive reply against the aforesaid show cause notice on 10.04.2021 thereby raising specific objections that the assessment cannot exceed beyond the scope of limited scrutiny for the purpose of which it has been selected for t....
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.... submitted that the impugned order is passed without following the due procedure prescribed under Section 144B of the Act, which is famously known as National Faceless Assessment Centre. The learned advocate appearing for the writ applicant has drawn attention of this Court that the impugned order has been passed without providing personal hearing through video conference, more particularly, when the writ applicant vide reply dated 23.04.2021 had specifically requested the respondent authority to provide an opportunity of personal hearing through video conference in terms of Section 144B(7) (vii) and section 144B(7) (xii) sub-clause (h) of the Act. 4. In response to the Notice dated 14.09.2021 issued by this Court, Mr. Varun K. Patel, the learned Standing Counsel has appeared on behalf of the respondent authorities. An affidavitin- reply affirmed by the Deputy Commissioner of Income Tax, Circle - 1(1)(1), Vadodara has been placed on record. At the outset, the learned Standing Counsel for the department has objected on the maintainability of the writ application more particularly, when the final assessment order has been challenged which is appealable by way of efficacious remedy....
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....the National Faceless Assessment Centre shall intimate the assessee that assessment in his case shall be completed in accordance with the procedure laid down under this section; (iv) the National Faceless Assessment Centre shall assign the case selected for the purposes of faceless assessment under this section to a specific assessment unit in any one Regional Faceless Assessment Centre through an automated allocation system; (v) where a case is assigned to the assessment unit, it may make a request to the National Faceless Assessment Centre for- (a) obtaining such further information, documents or evidence from the assessee or any other person, as it may specify; (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 evidence requisitio....
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....iii) is received from the National Faceless Assessment Centre, make in writing, a draft assessment order to the best of its judgment, either accepting the income or sum payable by, or sum refundable to, the assessee as per his return or making variation to the said income or sum, and send a copy of such order to the National Faceless Assessment Centre; (xv) the assessment unit shall, while making draft assessment order, provide details of the penalty proceedings to be initiated therein, if any; (xvi) the National Faceless Assessment Centre shall examine the draft assessment order in accordance with the risk management strategy specified by the Board, including by way of an automated examination tool, whereupon 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, ....
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.... prejudicial to the interest of said assessee, forward the draft assessment order or final draft assessment order to such assessee; or (B) in any other case, finalise the assessment as per the draft assessment order or the final 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, or refund of any amount due to, the assessee on the basis of such assessment; (b) in any other case, send the response received from the assessee to the assessment unit; (xxiv) the assessment unit shall, after taking into account the response furnished by the assessee, make a revised 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 ....
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....the concerned assessment unit; (xxx) the assessment unit shall in conformity of the directions issued by the Dispute Resolution Panel under sub-section (5) of section 144C, prepare a draft assessment order in accordance with sub-section (13) of section 144C and send a copy of such order to the National Faceless Assessment Centre; (xxxi) the National Faceless Assessment Centre shall, upon receipt of draft assessment order referred to in clause (xxx), finalise the assessment within the time allowed under sub-section (13) of section 144C 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, 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, ....
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....draft order, whether the issues on which addition or disallowance should be made have been discussed in the draft order, whether the applicable judicial decisions have been considered and dealt with in the draft order, checking for arithmetical correctness of variations proposed, if any, and such other functions as may be required for the purposes of review. (4) The assessment unit, verification unit, technical unit and the review unit shall have the following authorities, namely:- (a) Additional Commissioner or Additional Director or Joint Commissioner or Joint Director, as the case may be; (b) Deputy 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 throug....
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....21 of 2000); (vi) a person shall not be required to appear either personally or through authorised representative in connection with any proceedings before the income-tax authority at the National Faceless Assessment Centre or Regional Faceless Assessment Centre or any unit set up under this sub-section; (vii) in a case where a variation is proposed in the draft assessment order or final draft assessment order or revised draft assessment order, and an opportunity is provided to the assessee by serving a notice calling upon him to show cause as to why the assessment should not be completed as per the such draft or final draft 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....
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....king status of assessment, display of relevant details, and facility of download; (e) accessing, verification and authentication of information and response including documents submitted during the assessment proceedings; (f) receipt, storage and retrieval of information or documents in a centralised manner; (g) circumstances in which proviso to sub-section (6) shall apply; (h) circumstances in which personal hearing referred to clause (viii) shall be approved; (i) general administration and grievance redressal mechanism in the respective Centres and units. (8) Notwithstanding anything contained in sub-section (1) or subsection (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 sub-section (3) of section 143 or under section 144 in the cases referred to in sub-section (2) (other th....
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....ral, In-charge of the National Faceless Assessment Scheme Centre with the prior approval of the Board to lay down the standard procedure and process for effective functioning of the National Faceless Assessment Centres, Regional Faceless Assessment Centres and the Unit set up in an automated and mechanised environment for the various services including the service of notice, order or other communication, the receipt of an information or document, etc. One of which is important is subclause (h) of clause (xii) which provides for the circumstances in which the personal hearing referred to the clause (viii) needs to be approved. 16.7 Specific mention of sub-section (9) of Section 144 B needs at this stage which starts with Non-obstante clause and declares that the assessment made under sub-section (3) of Section 143 or under Section 144 in the cases referred to in subsection (2)other than 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 the said section. Principles of natural juristic writs large in this provision and legislature's instead to avail the opportunity of hearing....
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....rying the income, both via the showcause notice dated 13-4-2021 as well as the show-cause notice-cum-draft assessment order dated 23-4-2021. As noticed above, the declared income was proposed to be, substantially, varied. 11.3 In this context, if one were to look at the relevant provisions, [which, or the sake of convenience are extracted hereafter], then, one would get a sense as to why the legislature has provided a personal hearing in the matter: "144B. Faceless assessment - (1).** (7) For the purposes of faceless assessment- (vii) in a case where a variation is proposed in the draft assessment order, or final draft assessment order or revised draft assessment order, and an opportunity is provided to the assessee by serving a notice calling upon him to show-cause as to why the assessment should not be completed as per the such draft or final draft 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 C....
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....ement of availment of opportunity of personal hearing to the assesse whereby asked for. The need to bring on the statute section 144B for faceless assessment, was essentially for the purpose of bringing transparency and accountability and also to make it easier for all concerned by Page 46 of 72 Downloaded on employing technological advances as tools. The Court was also of the opinion that without or with such statutory scheme, the system has to be necessarily and essentially both transparent and accountable. 17. The Bombay High Court in case of M/s. Piramal Enterprises Ltd. vs. Addl. Commissioner of Income Tax, reported in (2021) 129 taxmann.com 18 (Bombay) was considering the issue of non availment of opportunity of hearing to hold that whenever the assessee requests for personal hearing so as to make the oral submissions or to represent the case, the same needs to be approved by the authorities referred to in the provision. The request is covered by sub clause (h) of clause (xii) which empowers the authorities with prior approval of the Board to lay down the standards, procedures and processes for effective functioning of National Faceless Assessment Centre. While so do....
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....to the assessee by serving a notice to show cause according to sub-clause (b) OR under sub-clause (c) decide to assign any DAO to a Review Unit (RU), whether prejudicial to interest of assessee or not. If the matter is referred to RU, the process according to clauses (xvii) to (xx) is to take place culminating into, a final draft assessment order (FDAO) by an Assessment Unit. 51. When draft assessment order (DAO) or final draft assessment order (FDAO) is prejudicial to the interest of the assessee, it entails an opportunity to showcause pursuant to sub-clause (b) of clause (xvi), giving option under clause (xxii) to assessee of furnishing response to NFAC. 52. Procedure as contained in clause (xxiii) is to be followed in the cases where DAO or FDAO is prejudicial to the interest of assessee after notice has been served on the assessee. 53. It would be seen that, up to clause (xxii) there is no segregation or distinction in treatment to be given to assessees bifurcating them into two categories viz, 'eligible assessee' and others' (other than eligible assessee). 54. Sub-clause (a) of clause (xxiii) prescribes courses to be adopted by N....
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....ed to the assessee by serving a notice to show-cause and the assessee or his representative can request for personal bearing so as to make his oral submissions or to present his case before the income-tax authorities in any unit. Further sub-section (7) provides under clause (ix) for hearing through video conferencing or video telephone including use of any telecommunication application software which support video conferencing or video telephone. 59. Sub section (7), clause (vii) stipulates as under :- "(7) For the purpose of faceless assessment- (i) to (vi)... (vii) in a case where a variation is proposed in the draft assessment order or final draft assessment order or revised draft assessment order, and an opportunity is provided to the assessee by serving a notice calling upon him to show cause as to why the assessment should not be completed as per the such draft or final draft 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;" 60. Plainly reading aforesaid provision w....
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....celess Assessment commences vide its sub-section (1) with a non-obstante clause and compulsively requires assessment u/ss 143(3) and 144 shall be by prescribed procedure contained in subsection (1) of section 144B in the cases referred to in sub-section (2) thereof. 65. Sub-section (9) of section 144B declares that assessment made under section 143(3) or under section 144(4) referable to sub-section (2) other than sub-section (8) on or after 1st day of April, 2021 shall be non est if such assessment is not made in accordance with the procedure laid down under section 144B. There is a telling/pronounced rigour, to follow the procedure under section 144B, lest the assessment would be non est. Going by the provisions under section 144B, when hearing has been envisioned and incorporated, it is imperative to observe principles of natural justice as stipulated." 18. In summation, it can be deduced from the provisions, as also the decisions discussed that Section 144B of the IT Act under heading of the Faceless Assessment provides for the assessment under Section 143 (3) and 144 to be carried out as per the procedure contained in Section 144 B of the IT Act. As noted above, Sub-s....
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.... specific request was made by the writ applicant vide letter dated 10.04.2021 and thereafter also vide letter dated 09.08.2021 seeking an opportunity for personal hearing through video conference. The relevant paragraph of the said communication dated 09.08.2021 is reproduce as under: "Facts of the case are not properly appreciated and the Judicial precendents relied upon by the assessee are ignored. Therefore, we request your good self to grant us an opportunity to explain the facts through video conferencing on 16th August, 2021 at 10:00 a.m." 10. In fact, it transpires from the record that on earlier occassion pursuant to the detail submissions made on 10.04.2021, the Assessing Officer had given option vide notice dated 23.04.2021 for video conference hearing. Further, it transpires that because of technical glitches, the video conference hearing as scheduled could not be conducted and it was thereafter that the Assessing Officer had once again addressed notice dated 04.06.2021 thereby offering opportunity to the writ applicant/assessee to activate the video conference request. Even in the affidavit-in-reply filed by the Deputy Commissioner of Income Tax, Circle - 1(....