On 2nd September, a bench of Delhi High Court consisting of Justices Manmohan and Navin Chawla while hearing a writ petition held that when no prior show cause notice, as well as draft assessment order, have been issued, there is a violation of principles of natural justice as well as mandatory procedure prescribed under “Faceless Assessment Scheme” and as stipulated in Section 144B of the Act.
It further stated that when there is a violation of principles of natural justice, the availability of an appellate remedy does not operate as a bar to the maintainability of the writ petition.
Facts of the case:
Present writ petition had been filed challenging the Assessment Order, Demand Notice and Notice for Penalty dated 23rd April 2021 passed by the National Faceless Assessment Centre under Section 143(3) read with Section 144B, Section 156 and Section 274 read with Section 271AAC(1) of the Income Tax Act 1961 for the AY 2018-19.
Contentions of the petitioner:
Learned counsel for the Petitioner stated that the impugned assessment order has been passed without issuing the mandatory show-cause notice and draft assessment order under Section 144B(1)(xvi)(b) of the Act.
He states that the Respondent’s action is violative of the principles of natural justice and Section 144B. He also states that in the absence of a show cause notice, the petitioner has been deprived of an opportunity to seek personal hearing.
Contention of the respondent:
Learned counsel for the respondent stated that the present writ petition is not maintainable as the petitioner has an alternative effective remedy by filing an appeal.
Observation and judgment of the court:
It was observed by the hon’ble bench of the High Court that once the assessment has been done by the National Faceless Assessment Centre, Delhi, it has to be in accordance with the statutory procedure prescribed for assessment by the said Authority and cannot be in accordance with the procedure prescribed under the earlier regime.
The court was also of the view that Section 144B(1)(xvi)(b) mandatorily provides for issuance of a show cause notice and draft assessment order before issuing the final assessment order.
Therefore, the court held that since in the present case no prior show cause notice as well as draft assessment order had been issued, there was a violation of principles of natural justice as well as mandatory procedure prescribed under “Faceless Assessment Scheme” as stipulated in Section 144B of the Act.
Thus, the order was set aside and the matter was remanded back to the Assessing Officer.
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