Delhi High Court
M/S Sas Fininvest Llp vs National E-Assessment Centre ... on 10 August, 2021
$~22
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 10.08.2021
+ W.P.(C) 5087/2021 & C.M.No.15585/2021
M/S SAS FININVEST LLP ..... Petitioner
Through Mr.Kapil Goel, Advocate.
versus
NATIONAL E-ASSESSMENT CENTRE INCOME TAX
DEPARTMENT NEW DELHI ..... Respondent
Through Mr.Anant Ram Mishra,
Advocate on behalf of Mr.Ajit
Sharma, Advocate.
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
HON'BLE MR. JUSTICE NAVIN CHAWLA
MANMOHAN, J. (Oral)
1. The petition has been heard by way of video conferencing.
2. Present writ petition has been filed challenging the Assessment
Order dated 31st March 2021 passed under Section 143(3) of the
Income Tax Act, 1961 [the Act] and disputed demand raised under
Section 156 of the Act, along with all consequent proceedings thereto.
3. Learned counsel for the Petitioner states that the Impugned
assessment order passed is jurisdictionally flawed and bad in law since
it is violative of the mandatory and binding natural justice
Signature Not Verified
Digitally Signed By:JASWANT
SINGH RAWAT
Signing Date:13.08.2021
06:46:01
requirements stipulated in faceless assessment scheme and relevant
CBDT instructions.
4. He emphasises that no mandatory valid show cause notice as
well as draft assessment order were issued before drawing an adverse
inference against the petitioner-assessee qua stated addition of short-
term capital loss of Rs 870,00,000 thus creating a colossal tax demand
coupled with initiation of penalty u/s 270A (9) of the Act.
5. He relies on para 4 of the Central Board of Direct Taxes
instruction no. 20/2015, dated 29th December 2015 which inter alia
provides for a fair opportunity to the Petitioner to explain its case and
mandates issuing a show cause notice. The relevant portion of the
said instruction is reproduced hereinbelow:-
"4. The Board further desires that in all cases under
scrutiny, where the Assessing Officer proposes to make
additions or disallowances, the assessee would be given
a fair opportunity to explain his position on the
proposed additions/disallowances in accordance with
the principle of natural justice. In this regard, the
Assessing Officer shall issue an appropriate show-
cause notice duly indicating the reasons for the
proposed additions/disallowances along with necessary
evidences/reasons forming the basis of the same. Before
passing the final order against the proposed
additions/disallowances, due consideration shall be
given to the submissions made by the assessee in
response to the show-cause notice. "
6. Per contra, learned counsel for the respondent states that the
present writ petition is not maintainable as the petitioner has an
alternative effective remedy by filing an appeal.
Signature Not Verified
Digitally Signed By:JASWANT
SINGH RAWAT
Signing Date:13.08.2021
06:46:01
7. This Court is of the view that the Faceless Assessment Scheme
mandatorily provides for issuance of a prior show cause notice and
draft assessment order before issuing the final assessment order. The
relevant portion of the scheme is reproduced hereinbelow:-
"(v) where a case is assigned to the assessment unit, it
may make a request to the National e-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;
xxx xxx xxx
(xiv) the assessment unit shall, after taking into account
all the 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 e-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 modifying
the said income or sum, and send a copy of such order to
the National e-assessment Centre;"
8. It is settled law that the Government is bound to follow the rules
and standards they themselves had set on their pain of their action
being invalidated [See: Amarjit Singh Ahluwalia Vs. State of Punjab
& Ors.; 1975 (3) SCR 82 and Ramana Dayaram Shetty Vs.
International Airport Authority of India & Ors.; (1979) 3 SCC 489].
9. Since in the present case no prior show cause notice as well as
draft assessment order had been issued, there is a violation of
principles of natural justice as well as mandatory procedure prescribed
under "Faceless Assessment Scheme". It is well settled law that where
Signature Not Verified
Digitally Signed By:JASWANT
SINGH RAWAT
Signing Date:13.08.2021
06:46:01
there is violation of principles of natural justice, appeal is not an
alternative effective remedy and a writ petition is maintainable.
10. Consequently, keeping in view the aforesaid facts, the
impugned assessment order dated 31st March 2021 passed under
Section 143(3) the Act and disputed demand raised under Section 156
of the Act, are set aside and the matter is remanded back to the
Assessing Officer, who shall issue a show cause notice and draft
assessment order and thereafter pass a reasoned order in accordance
with law. With the aforesaid direction, the present writ petition along
with pending application stands disposed of.
11. The order be uploaded on the website forthwith. Copy of the
order be also forwarded to the learned counsel through e-mail.
MANMOHAN, J
NAVIN CHAWLA, J
AUGUST 10, 2021
KA
Signature Not Verified
Digitally Signed By:JASWANT
SINGH RAWAT
Signing Date:13.08.2021
06:46:01
