TaxTMI 
TaxTMI 
2026 (7) TMI 1500
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....of the Act, contrary to the Faceless Assessment Framework, violative of principles of natural justice, and perverse even on merits. 3. Brief facts of the case, as pleaded in the Petition, are brought out hereunder: a. The Petitioner is an individual and a citizen of India. According to the Petitioner, he has been residing and working in the United Arab Emirates for several years and claims the status of a non-resident under the Act for the Assessment Year 2018- 19. b. On 17th March 2022, Respondent No. 1 issued a Notice under Section 148A(b) of the Act alleging that the Petitioner had purchased immovable property for Rs. 2,04,60,800/- during the year under consideration and had not filed any return of income. The Notice did not disclose the source of information, details of the property or the date of purchase, and continued to mention the Petitioner's old Virar address. c. The said Notice was not replied to at that stage as the Petitioner, being based in UAE, was not then fully conversant with Indian tax procedures and had no regular consultant. It is the Petitioner's case that only in January 2023 did he approach a Chartered Accountant and th....
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.... on 8th February 2023 clarifying that his response to the Notice dated 5th January 2023 had already been filed on 12th January 2023 with relevant documents. j. On 3rd February 2023, a further Notice under Section 142(1) was issued by the faceless unit seeking clarification regarding source of certain payments aggregating to Rs. 15,00,000/- and calling for the HDFC NRE account statement for FY 2016-17. k. On 10th February 2023, a Notice under Section 143(2) was issued to the Petitioner taking cognizance of the return of income filed. l. On 15th February 2023, the Petitioner filed a detailed Reply to the Notice dated 3rd February 2023 and also separately replied to the Notice under Section 143(2). m. Thereafter, no further Notices were issued for over a month and all proceedings until then were being handled by the faceless assessment unit. n. Suddenly, on 29th March 2023, a Show Cause Notice was issued not by the faceless assessment unit but by Respondent No. 1, i.e. the Income Tax Officer, Ward 4(1), Gurgaon. An SMS intimating such Notice was received only late in the night on 29th March 2023 and the Petitioner was asked to respond by 2:....
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....n-resident under Section 6 of the Act, and had also annexed copies of his passport. No contrary allegation was thereafter raised, nor was any further query put by the Assessing Officer on this aspect. On the contrary, in the final Assessment Order and computation, the status of the Petitioner is reflected as a "non-resident". He relied upon the Memorandum explaining the provisions relating to direct taxes in the Finance Bill, 2020, which records that the scope of Section 144C was expanded by defining "eligible assessee" to include a non-resident, not being a company or a foreign company. He also relied upon the decision of this Court in Classic Legends (P.) Ltd. v. Assessment Unit & Ors. [(2026) 484 ITR 550 (Bom)] in this regard. To buttress the contention that if no draft Order is passed in the case of an eligible Assessee, then the final Assessment Order is without jurisdiction, he relied upon many decisions of this Court and other High Courts, which are referred to later on. b. Secondly, Mr. Gandhi submitted that the impugned Order is passed under Section 144 of the Act, i.e. as a best judgment assessment. According to him, Section 144 can be invoked only if one of the ....
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....essing Officer before finalizing the assessment. d. Lastly, on merits, Mr. Gandhi submitted that the very information received by the Department was erroneous. According to the Department, the Petitioner had purchased an immovable property for Rs. 2,04,60,800/- and had not filed any return. The Petitioner consistently informed the Department that he had purchased only one agricultural property for Rs. 50,00,000/-, whose stamp valuation was Rs. 51,15,200/-. The Petitioner provided a copy of the purchase agreement and also Form 26AS to show that the same transaction had been reported four times by the Sub-Registrar, Guhagar, as even the dates and value of the transaction are identical, resulting in the figure of Rs. 2,04,60,800/-. In the Reply dated 12th January 2023, the Petitioner specifically pointed out that the figure of Rs. 2,04,60,800/- appeared to be exactly four times the stamp valuation of Rs. 51,15,200/-. This was reiterated again in response to the Show Cause Notice. He submitted that the faceless Assessing Officer did not dispute this position. On the contrary, as regards the actual purchase consideration of Rs. 50,00,000/-, although the Petitioner had furnished....
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.... as the assessment was completed by Respondent No. 1, the Assessment Order itself refers to Notices dated 5th January 2023 and 12th January 2023 and, therefore, it cannot be said that Section 144 was wrongly invoked. c. On the third contention relating to jurisdiction, Mr. Sharma relied upon paragraphs 7 to 12 of the Affidavit-in-Reply and submitted that the PAN jurisdiction of the Petitioner had shifted from time to time between different wards and circles and, in light of Section 124(3) of the Act, the Petitioner was not entitled to call in question the jurisdiction of Income Tax Officer, Ward 4(1), Gurgaon, as he had not challenged the jurisdiction within one month of receipt of Notice under Section 142(1) or 143(2), whichever was earlier. However, he did not dispute the statement in paragraph 18 of the Reply that if the Petitioner is a non-resident, the jurisdictional officer would be the one in the International Taxation Circle. d. On merits, he submitted that disputed factual issues arise and, therefore, even if this Court were to accept the contentions of the Petitioner, the proper course would be to set aside the Order and remand the matter to the Assessin....
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....n 144C is concerned, we find considerable substance in the submission of Mr. Gandhi. The Petitioner had specifically disclosed his status as a non-resident in the return of income filed on 12th January 2023. In the Reply dated 12th January 2023 filed before the Assessing Officer, the Petitioner gave a detailed tabulation of his period of stay in India and specifically reproduced Section 6 of the Act to explain why he was a non-resident for AY 2018-19. Copies of passport pages were also annexed. Thereafter, no further query disputing the Petitioner's residential status was raised by the Department. Significantly, in the Assessment Order as well as in the Computation Sheet, the status of the Petitioner is shown as "non-resident". We are unable to accept the submission of Mr. Sharma that such description was a mere copy-paste without application of mind. Had there been any doubt in the mind of the Assessing Officer, he would either have assessed the Petitioner as a resident or at the very least dealt with the issue in the body of the Order. He could have raised this issue in the course of reassessment proceedings also. The complete absence of any discussion to the contrary in the impu....
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....aft Order. Hence, the impugned final Assessment Order dated 30th March 2023 is without jurisdiction and therefore, has to be quashed and set aside. An identical view has been taken, very recently, in the following cases: a. Barentz India (P.) Ltd. vs. Assessment Unit, National Faceless Assessment Centre, New Delhi [2025] 179 taxmann.com 582; b. Hansgrohe India (P.) Ltd. vs. Assessment unit Income-tax Dept. [2026] 310 Taxman 446 (Bombay). 13. We are not referring to the plethora of judgments on this issue, as the law is well settled. We may also note that the contention, that this is merely a procedural defect and not a jurisdictional infirmity, cannot be accepted. The entire statutory right of an eligible Assessee to approach the Dispute Resolution Panel stands defeated if a final Assessment Order is passed straightaway without first issuing a draft Order. Such a defect goes to the root of the matter. In our view, therefore, the impugned Assessment Order is liable to be set aside on this ground alone. 14. Even on the second aspect, namely the invocation of Section 144 of the Act, we find ourselves in complete agreement with the submissions of Mr. Gandhi. Sec....
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....ctober 2022 admittedly remained unanswered. However, another Notice dated 5th January 2023 was issued seeking substantially the same details. In response thereto, the Petitioner filed the return on 12th January 2023 and also filed a detailed online submission on the same date together with annexures. Thereafter, as set out earlier, all communications or Notices have been replied to. Therefore, Section 144 could not have been invoked. In this regard, the decision of this Court in Ashok Commercial Enterprises v. Assistant Commissioner of Income Taxation [[2023] 154 taxmann.com 144 (Bom); [2023] 459 ITR 100 (Bom)] is directly applicable. The relevant paragraphs of the said judgment read as under : "In the instant case, as paragraph 4 of the impugned assessment order for Assessment Year 2017-2018 clearly shows, respondent has erroneously proceeded on the basis that no return had been filed by petitioner pursuant to the notice under section 153C of the Act, since he records that no return is available on the ITBA portal. This factual basis is demonstrably erroneous. A return of income pursuant to notice issued under section 153C(1) of the Act has been filed on 15th August 2021 ....
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....enty-four hours to respond. In such circumstances, it would be wholly unrealistic to non-suit the Petitioner on the ground that no jurisdictional objection was raised within the time-frame set out in Section 124(3). The Faceless Assessment Mechanism and the peculiar manner in which the case was dealt with have to be harmoniously construed with Section 124. We are, therefore, unable to accept the objection of the Respondents on this count. 21. Lastly, even on merits, we do not find any justification to sustain the impugned Order. The Petitioner had, as early as on 12th January 2023, specifically brought to the Notice of the Department that the figure of Rs. 2,04,60,800/- was erroneous and arose because the same transaction of stamp value Rs. 51,15,200/- dated 8th December 2017 had been reported four times in Form 26AS by the same reporting authority. The Petitioner also made it clear that he had purchased only one agricultural property for Rs. 50,00,000/- and produced the purchase deed. No meaningful dispute was thereafter raised by the faceless Assessing Officer on this aspect. The only issue raised by the faceless unit was source of certain payments aggregating Rs. 15,00,000/- ....
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....elevant paragraphs of this decision read as under : "8. On the first objection of the Revenue that the Writ Petition ought not to be entertained because there is an alternate remedy available to the Petitioner, we find that in the peculiar facts and circumstances of this case, this Court can exercise its discretion under Article 226 of the Constitution of India and interfere in the above matter when an assessment order is completely illegal, contrary to the clear mandate of law would be, in our opinion, at least prima facie, without jurisdiction. 9. Further, it is well settled that the jurisdiction of the High Court in entertaining the Writ Petition, despite alternate statutory remedies, is not affected in a case where the authority against whom the Writ is filed has usurped its jurisdiction without any legal foundation. Not entertaining a Writ Petition where statutory remedies are available, is really one of self-restraint, and it can never be argued that the Writ Petition is not maintainable. We, therefore, do not find any merit in the first argument canvassed on behalf of the Revenue .... 12. As far as the request made for remanding the matter....