Gujarat High Court
Swapn Developers vs National Faceless Appeal Centre(Nfac) on 26 August, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/4807/2025 JUDGMENT DATED: 26/08/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 4807 of 2025
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
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Approved for Reporting Yes No
✓
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SWAPN DEVELOPERS
Versus
NATIONAL FACELESS APPEAL CENTRE(NFAC) & ANR.
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Appearance:
MR SUDHIR M MEHTA(2058) for the Petitioner(s) No. 1
MS SHAILEE S MEHTA(5873) for the Petitioner(s) No. 1
KARAN G SANGHANI(7945) for the Respondent(s) No. 1,2
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 26/08/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr. Sudhir
Mehta for the petitioner and learned
Senior Standing Counsel Mr. Karan Sanghani
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for the respondent.
2. Having regard to the controversy
involved, with the consent of learned
advocates for the respective parties, the
matter is taken up for hearing.
3. Rule returnable forthwith. Learned
Senior Standing Counsel Mr. Karan Sanghani
waives service of notice of rule on behalf
of the respondent.
4. By this petition under Article 226 of
the Constitution of India, the petitioner
has prayed for the following reliefs:
"A. Be pleased to admit and allow
this petition.
B. Be pleased to issue writ of
mandamus or writ of certiorari or
any other appropriate writ, order
or direction to quash and set
aside the impugned order dated
21.11.2024 under section 271(1)(c)
of the Act at Annexure "K".
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C. Pending admission, hearing and
final disposal of the present
petition, this Hon'ble Court be
pleased to stay operations and
recovery of penalty of Rs.
26,90,780/- and implementation of
the impugned order dated
21.11.2024 passes u/s 271 (1) (c)
of the Act at Annexure "K".
D. Be pleased to grant any other
and further relief which may be
deemed fit and proper in the
interest of justice.
E. Be please to direct to
respondents to an award of costs
to the petition to the
petitioner."
5. Brief facts of the case are that the
petitioner is a partnership firm engaged
in the business of builder and property
developer.
6. The petitioner filed its return of
income on 30.09.2013 for the Assessment
Year 2013-2014 declaring loss of Rs.
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34,36,500/-.
7. The Assessing Officer passed the
assessment order under section 143(3) of
the Income Tax Act, 1961 (For short "the
Act") dated 18.03.2016 determining the
income of the petitioner at Rs.
64,02,990/-.
8. Respondent no.2 thereafter issued a
notice of demand under section 156 of the
Act making the petitioner liable to pay a
sum of Rs.26,90,780/- for the Assessment
Year 2013-2014 and a show cause notice
under section 274 read with section 271 of
the Act dated 18.03.2016 was issued
pending initiation of proceedings for
penalty.
9. Being aggrieved by the assessment
order, the petitioner preferred an appeal
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manually under section 246A of the Act by
filing Form No.35.
10. It is the case of the petitioner that
the said appeal under section 246A was
transferred to the NFAC who passed an
order under section 250 of the Act dated
16.02.2023 confirming the penalty under
section 271(1((c) of the Act on incorrect
facts instead of adjudication in appeal
under section 246A against the assessment
order under section 143(3) of the Act.
11. It is the case of the petitioner that
since the appeal preferred by the
petitioner challenged the assessment order
under section 143(3) of the Act and not
the penalty order under section 271(1)(c)
of the Act, the petitioner preferred a
rectification application under section
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154 of the Act.
12. Respondent no.1 passed the order under
section 154 of the Act dated 16.10.2023 to
amend the order dated 16.02.2023.
13. It is the case of the petitioner that
respondent no.1 passed an order under
section 154 read with section 250 of the
Act dated 11.07.2024 to amend the order
dated 16.02.2023 whereby the corrected
order under section 250 of the Act along
with the corrected dismissal order dated
16.10.2023 adjudicating assessment order
under section 143(3) of the Act were
uploaded, however, the correct order
against the appeal was only made available
after 17 months i.e. on 11.07.2024.
14. Aggrieved by the appellate order under
section 250 of the Act and assessment
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order under section 143(3) of the Act, the
petitioner preferred an appeal before
Income Tax Appellate Tribunal, Surat by
filing Form 36.
15. The respondent no.1 thereafter passed
a penalty order under section 271(1)(c) of
the Act dated 26.07.2004 imposing total
penalty of Rs. 30,40,401/-.
16. The petitioner preferred an appeal
before the CIT (Appeals) against the said
penalty order.
17. Respondent no.1 thereafter passed the
impugned rectification order under section
154 of the Act on 21.11.2024 dismissing
the appeal and confirming the penalty
under section 271(1)(c) of the Act.
18. Being aggrieved, the petitioner has
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preferred the present petition.
19. Learned advocate Mr. Sudhir Mehta for
the petitioner submitted that the impugned
order is passed without considering the
fact that the rectification order was
already passed under section 154 of the
Act and the petitioner being aggrieved by
such rectification order, has already
preferred an appeal before the Tribunal.
It was further submitted that the impugned
order dated 21.11.2024 is also not tenable
in the eye of law in view of the fact that
the order which is sought to be rectified
already stands rectified by the appellate
authority. It was also submitted that the
penalty order dated 26.07.2024 was passed
prior to passing of the order and was
under challenge and therefore, there was
no question of restoring such penalty
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order by impugned rectification order.
20. It was further submitted that
respondent no.1 National Faceless
Assessment Centre (NFAC) had passed an
order dated 16.02.2023 under section
271(1)(c) of the Act imposing penalty for
cash deposit of Rs.56,64,000/-, however by
rectification order dated 16.10.2023, the
appellate authority of NFAC has rectified
the mistake of wrongly uploading the order
of different assessee on different subject
matter and therefore, the complete order
was served only on 11.07.2024 and
accordingly, the order dated 21.11.2024
passed by NFAC against the assessment
order was in pursuance of the wrong order
dated 16.02.2023 for levy of penalty which
had nothing to do with the assessee. It
was therefore, submitted that the impugned
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order passed by NFAC rectifying the wrong
order is of no consequence so far as the
petitioner is concerned.
21. Per contra, learned Senior Standing
Counsel Mr. Karan Sanghani could not
controvert the facts emerging from the
record to the effect that the impugned
rectification order dated 21.11.2024 is an
order rectifying the wrong order and
therefore, such order cannot be sustained.
22. Having heard the learned advocates for
the respective parties and in view of the
submissions recorded here-in-above,
insofar as facts of the case are concerned
it can be said res ipsa loquitur.
23. In view of the above, when facts are
not in dispute as narrated here-in-above,
it is apparent that the impugned
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order dated 21.11.2024 passed under
section 271(1)(c) of the Act is liable to
be quashed and set aside and is
accordingly quashed and set aside.
24. Petition stands disposed of. Rule is
made absolute to the aforesaid extent. No
order as to costs.
(BHARGAV D. KARIA, J)
(PRANAV TRIVEDI,J)
RAGHUNATH R NAIR
