Aryan Education Society vs National Faceless Assessment ...
2022 Latest Caselaw 8824 Bom

                                                                            24-WP-2499-2022.doc


                               IN THE HIGH COURT OF JUDICATURE AT BOMBAY

                                     ORDINARY ORIGINAL CIVIL JURISDICTION

                                        WRIT PETITION NO.2499 OF 2022

                     ARYAN EDUCATION SOCIETY                      )...PETITIONER
                              V/s.
                     NATIONAL FACELESS ASSESSMENT   )
                     CENTRE DELHI (NFAC) AND OTHERS )...RESPONDENTS

                     Mr. Vasudev Ginde i/b. Mr. Kumar U. Kale, Advocate for the
                     Petitioner.

                     Mr. Akhileshwar Sharma, Advocate for the Respondents.

                                          CORAM       :    DHIRAJ SINGH THAKUR &
                                                           ABHAY AHUJA, JJ.

                                          DATE        :    6th SEPTEMBER 2022

                     P.C. :

                     1        By this petition filed under Article 226 of the Constitution of

India, Petitioner is aggrieved by the order dated 8 th March 2022

passed under Section 147 read with Section 144B of the Income

Tax Act, 1961 (the "Act") for Assessment year 2014-15 and the

consequent notice of demand of even date under Section 156 of

the Act and show cause notice under Section 274 read with

Section 271(1)(c) of the Act.

        Digitally
        signed by
        ARTI
ARTI    VILAS
VILAS   KHATATE
KHATATE Date:
        2022.09.08


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2     Petitioner is a charitable Trust claiming to be registered

under the Bombay Public Trusts Act, 1950 and as well as under

Section 12A of the Act. Petitioner claims to run multiple

educational institutions at Mumbai and District Palghar from

Kindergarten to 10th Standard as well as D.Ed courses. It is

submitted that for the relevant Assessment year 2014-15,

Petitioner did not file its return of income as its accounts from

financial year 2004-05 onwards could not be compiled, adopted

and approved as Annual General Body Meeting of Petitioner could

not be held due to management disputes. After the elections were

held in the year 2015, Petitioner decided to regularize its affairs

and after which the accounts for the period 2004-05 to 2016-17

were compiled, audited, adopted and approved at the Annual

General Body Meeting held on 24 th December 2017. Vide letter

dated 31st March 2018, Petitioner requested the respondent no.3

Commissioner of Income Tax (Exemption), Mumbai to allow filing

of belated returns for the Assessment year 2004-05 to Assessment

year 2015-16 and to claim refund of tax deducted at source for

those years.

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3     Petitioner's case is that the second respondent Income Tax

Officer, Exemption Ward 1(1), Mumbai issued a notice dated 31 st

March 2021 under Section 148 stating that he had reason to

believe that Petitioner's income chargeable to tax for Assessment

year 2014-15 had escaped assessment within the meaning of

Section 147 of the Act. In response to the same, Petitioner filed its

return of income on 19th May 2021. Thereafter, the Income Tax

Officer issued notice dated 10th June 2021 under Section 143(2)

read with Section 147 of the Act and also forwarded the reasons

recorded for reopening of the assessment.

4 Petitioner participated in the reassessment proceedings and

vide its letter dated 4th August 2021 (e-filed on 5th August 2021)

responded to the aforesaid notice requesting for approval under

Section 151 of the Act and also for a personal hearing.

5 Thereafter, notices dated 23rd December 2021, 16th February

2022 and 9th March 2022 were issued by the first respondent viz.

National Faceless Assessment Centre, Delhi (NFAC) under Section

142(1) of the Act calling for various documents / information.

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6     It is the case of Petitioner that Petitioner responded to the

same by filing a letter dated 4th March 2022 to notice dated 16th

February 2022 on the Income Tax portal and also furnished

documents/information mentioned therein, in addition to request

for personal hearing.

7 Thereafter, a show cause notice dated 24th March 2022 was

issued by NFAC which was digitally signed at 17:49 hours IST and

received by Petitioner on 24th March 2022 at 20:12 hours IST

along with a draft assessment order whereby Petitioner was asked

to show cause as to why the proposed variation as per the said

draft order should not be made to the returned income.

8 It is submitted that the time allowed for filing the response

to the show cause notice was till 23:59 hours of 26 th March 2022

i.e. only about two days' time was given for the same.

9 Mr. Vasudev Ginde, learned counsel for Petitioner, would

submit that Petitioner hardly had any time to collect the

voluminous data to be submitted by 26th March 2022, as per the

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said notice. Consequently, Petitioner could not file its response to

the said show cause notice due to the short time granted by the

NFAC.

10 The NFAC passed the impugned assessment order on 28 th

March 2022, digitally signed on 29th March 2022 at 04:19 IST

under Section 147 read with Section 144B of the Act making an

addition of Rs.8,00,64,960/- and raising a demand of

Rs.7,46,25,575/-. In addition, a notice under Section 271(1)(c) of

the Act was also issued initiating penalty proceedings against

Petitioner.

11 Petitioner is aggrieved that the impugned order has been

passed in gross violation of the principles of natural justice and a

huge demand of Rs.7.50 crores has been raised on Petitioner for

tax and interest without giving any reasonable opportunity of

being heard, as mandated under Section 144B of the Act, which

has caused enormous hardship and prejudice to Petitioner.

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12    Learned counsel for Petitioner would submit that the show

cause notice dated 24th March 2022 along with the draft

assessment order as well as the final assessment order dated 29 th

March 2022 have been passed without considering the reply dated

4th March 2022 which has been uploaded along with various other

documents on 4th March 2022 as can be evidenced from the e-

Proceedings Response Acknowledgment annexed at pages 118 to

120 of the petition. Learned counsel would submit that even

though the due date of submission was 21 st February 2022, the

notice and the orders have been passed much after the filing of

the reply on 4th March 2022, which the respondent no.1 ought to

have considered.

13 A perusal of the show cause notice, draft assessment order

as well as the final assessment order indicates that the response

dated 4th March 2022 filed by Petitioner was not considered. This

is clearly borne out from paragraph 3 of the draft assessment

order as well as the final assessment order, where it is recorded

that "........notices u/s 142(1) of the Act were also issued to the

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assessee-trust but no replies had been furnished by the assessee-

trust."

14 An Affidavit-in-Reply dated 11th August 2022 has been filed

on behalf of the respondents. Mr. Akhileshwar Sharma, learned

senior standing counsel for the Revenue draws the attention of

this Court to internal page 34 of the said affidavit to submit that

this Court may set aside the assessment orders and restore the

same to the file of the Jurisdictional Assessing Officer (JAO) for

fresh consideration after giving necessary opportunity of hearing

to Petitioner and after following due process of law.

15 The following extract of Section 144B as relevant to

Assessment year 2014-15 is usefully quoted as under :

""Faceless Assessment.

144B. (1) Notwithstanding anything to the contrary contained in any other provisions of this Act, the assessment under sub- section (3) of section 143 or under section 144, in the cases referred to in sub-section (2), shall be made in a faceless manner as per the following procedure, namely:- ................

................

................

(xiv) the assessment unit shall, after taking into account all the

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relevant material available on the record make in writing, a draft assessment order or, in a case where intimation referred to in clause (xiii) 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;"

The aforesaid provision makes it clear that it is only after taking

into account all the relevant material available on record, that a

draft assessment order is to be made, which, admittedly, has not

been done as the order has been passed without considering the

material uploaded on 4th March 2022.

16 Having heard the learned counsel for Petitioner and the

Revenue and having perused the material placed before us and

having examined the provisions of Section 144B in relation to the

aforesaid facts, we are of the view that this is a fit case for

invoking our jurisdiction under Article 226 of the Constitution of

India and setting aside the impugned assessment order dated 28 th

March 2022 and remanding the matter back for fresh

consideration by the JAO in accordance with the provisions of

Section 144B of the Act.

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17    Accordingly, the assessment order dated 28th March 2022

passed under Section 147 read with Section 144B of the Act for

Assessment year 2014-15 and the consequent notice of demand of

even date under Section 156 of the Act and show cause notice

under Section 274 read with Section 271(1)(c) of the Act are

hereby quashed and set aside and restored to the file of the JAO.

The JAO is directed to pass a fresh assessment order in accordance

with law within a period of fourteen weeks from the date hereof,

after giving an opportunity of hearing to Petitioner. All

contentions are left open.

18 Petition is allowed in the above terms. No costs.

      (ABHAY AHUJA, J.)          ( DHIRAJ SINGH THAKUR, J.)




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