Bombay High Court
Aryan Education Society vs National Faceless Assessment ... on 6 September, 2022
Bench: Dhiraj Singh Thakur, Abhay Ahuja
23-WP-2492-2022.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.2492 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 29 th March 2022
passed under Section 147 read with Section 144B of the Income
Tax Act, 1961 (the "Act") for Assessment year 2015-16 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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19:26:13
+0530
Digitally
signed by
ARTI ARTI VILAS
KHATATE
VILAS Date:
KHATATE 2022.09.08
19:25:33
+0530
23-WP-2492-2022.doc
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 2015-16,
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 2015-16 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 4th January 2022, 11th 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 5th March 2022 to notice dated 11th
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 26th March 2022 was
issued by NFAC which was digitally signed at 16:29 hours IST and
received by Petitioner on 26th March 2022 at 20:52 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 28 th March 2022
i.e. only two days' time was given for the same.
9 Mr. Vasudev Ginde, learned counsel for Petitioner would
submit that 26th March 2022, the date on which the notice was
sent and received by Petitioner, was a Saturday and 27 th March
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2022 was a Sunday, leaving Petitioner hardly any time to collect
voluminous data to be submitted by 28th March 2022, as per the
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 dated
29th March 2022 under Section 147 read with Section 144B of the
Act making an addition of Rs.7,91,26,010/- and raising a demand
of Rs.6,70,85,554/-. 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.6.70 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 26th 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
5th March 2022 which has been uploaded along with various other
documents on 5th March 2022 as can be evidenced from the e-
Proceedings Response Acknowledgment annexed at pages 108 and
109 of the petition. Learned counsel would submit that even
though the due date of submission was 17th February 2022, the
notice and the orders have been passed much after the filing of
the reply on 5th 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 5th 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 2015-16 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 5th 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 29 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 29th March 2022
passed under Section 147 read with Section 144B of the Act for
Assessment year 2015-16 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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