Madras High Court
M/S.Take Solutions Limited vs The Income Tax Officer on 19 July, 2023
W.P.No.12817 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 19.07.2023
CORAM
THE HONOURABLE MR.JUSTICE C.SARAVANAN
W.P.No.12817 of 2021
and
W.M.P.Nos.13608, 13609, 17818 & 29336 of 2021
M/s.Take Solutions Limited,
Represented by its Director,
M/s.N.S.Shobana ... Petitioner
Vs
1. The Income Tax Officer,
National e-Assessment Centre,
Income Tax Department,
Ministry of Finance,
Room No.401, 2nd Floor, E-Ramp,
Jawaharlal Nehru Stadium,
Delhi – 110 003.
2. The Assistant Commissioner of Income Tax,
Corporate Circle 3(1),
Wanaparthy Block,
No.121, Mahatma Gandhi Road,
Nungambakkam,
Chennai – 600 034. ... Respondents
https://www.mhc.tn.gov.in/judis
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W.P.No.12817 of 2021
Prayer: Petition filed under Article 226 of the Constitution of India,
praying for issuance of a Writ of Certiorari, to call for the records in DIN
& Order No:ITBA/AST/F/144C/2021-22/1033125542(1) dated
27.05.2021 for the Assessment Year 2017-2018 on the file of the first
respondent and quash the same.
For Petitioner : Mr.R.Sandeep Bagmar
For Respondents : Mrs.S.Premalatha
Junior Standing Counsel
for
Mr.R.S.Balaji
Senior Standing Counsel
ORDER
The petitioner has challenged the Impugned Assessment Order
dated 27.05.2021 passed under Section 144C of he Income Tax Act,
1961 for the Assessment Year 2017-2018.
2. By the Impugned Assessment Order dated 27.05.2021, the first
respondent has added several amounts to the income disclosed by the
petitioner in the Returns filed under Section 139 of the Income Tax Act,
1961.
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W.P.No.12817 of 2021
3. It is the specific case of the petitioner that as far as the petitioner
is concerned, the petitioner is also an eligible assessee under the
provisions of Section 144C of the Income Tax Act, 1961 and a portion of
the assessment was before the Transfer Pricing Officer. As far as non
transfer pricing issues which are regular corporate issues are concerned,
the respondents were required to comply with the requirements of Section
144B(1) (xvi)(b). However, without complying with the same, the
Impugned Order has been passed under Section 144C of the Income Tax
Act, 1961.
4. It is submitted that the counter filed by the respondents have
also admitted that in Page 5 Paragraph No.7 of the counter that Show
Cause Notice was not sent along with the Draft Assessment Order to the
petitioner as the Risk Management Strategy raised a flag “N” and
therefore neither a Show Cause Notice nor a Draft Assessment Order was
to be issued before the Impugned Order was passed.
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W.P.No.12817 of 2021
5. The learned counsel for the petitioner has drawn attention to
Section 144B as it stood prior to 01.04.2022 for the period in dispute.
6. The learned Junior Standing Counsel for the respondents on the
other hand would submit that the assessment unit was required to make a
Draft Assessment Order in writing and send the same to the National
Faceless Assessment Centre under the provisions of Section 144B of the
Income Tax Act, 1961.
7. It is submitted that Section 144 B(1)(xiv) does not envisage by
sending a copy of the Draft Assessment Order to the assessee and
therefore, there is no merits in the present writ petition.
8. I have considered the arguments advanced by the learned
counsel for the petitioner and the learned Junior Standing Counsel for the
respondents.
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W.P.No.12817 of 2021
9. The provisions of Section 144B of the Income Tax Act, 1961 as
it stood prior to a substitution with the new provisions with effect from
01.04.2022 is clear. Under Sub-clause (xiv) to Sub-section (1) to Section
144B of the Income Tax Act, 1961 as it stood prior to 01.04.2022 for the
relevant period in dispute, the assessment unit was required to make a
Draft Assessment Order after taking into account all relevant materials
available on the records or in a case where intimation referred to in clause
(xii) was received from the National Faceless Assessment Centre make a
Draft Assessment Order to the best of its judgment, either accepting the
income or was payable or was refundable to the assessee as per his
Return or making such variation to the said income or same and send a
copy of the said order to the National Faceless Assessment Centre.
10. Sub clause (xiv) to Sub clause (1) to Section 144B of the
Income Tax Act, 1961 reads as under:
“(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
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W.P.No.12817 of 2021
(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”
11. As per Sub clause (xvi) to Sub clause (1) to Section 144B of
the Income Tax Act, 1961, the National Faceless Assessment Centre was
required to examine Draft Assessment Order in accordance with the Risk
Management Strategy(RMS) specified by the Board including by way of
an automated examination tool, whereupon it may decide to:-
(a) finalise the assessment, in case no variation
prejudicial to the interest of assessee is
proposed, as per the draft assessment order
and serve a copy of such order and notice for
initiating penalty proceedings, if any, to the
assessee, along with the demand notice,
specifying the sum payable by, or refund of
any amount due to, the assessee on the basis
of such assessment; or
(b) ...provide an opportunity to the assessee, in
case any variation prejudicial to the interest
of assessee is proposed, by serving a notice
calling upon him to show cause as to why the
proposed variation should not be made; or
(c) assign the draft assessment order to a review
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W.P.No.12817 of 2021
unit in any one Regional Faceless Assessment
Centre, through an automated allocation
system, for conducting review of such order.
12. What follows the above is enumerated in Sub clause (xvii) &
Sub clause (xviii) to Sub clause (1) to Section 144B of the Income Tax
Act, 1961, which reads as under:
144B(1)(xvii) 144B(1)(xviii)
The review unit shall The National Faceless
conduct review of the draft Assessment Centre shall,
assessment order referred to upon receiving concurrence
it by the National Faceless of the review unit, follow
Assessment Centre the procedure laid down in:-
whereupon it may decide
to:-
(a) sub-clause (a) of clause
(a) concur with the draft (xvi); or
assessment order and
intimate the National
Faceless Assessment
Centre about such
concurrence; or
(b) sub-clause (b) of clause
(b) suggest such variation, as (xvi)
it may deem fit, in the
draft assessment order
and send its suggestions
to the National Faceless
Assessment Centre.
13. Thus, it is evident that the procedure that is contemplated
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W.P.No.12817 of 2021
under the provisions of Section 144B(1) of the Income Tax Act, 1961,
has not been complied with. These procedures are intended to safeguard
the interest of the Income Tax Assessees so that they are not put to any
prejudice.
14. It is evident that under Sub clause (xvi) to Sub section (1) to
Section 144B of the Income Tax Act, 1961, as it stood in case any
variation prejudicial to the interest of the assessee, the National Faceless
Assessment Centre is required to serve a notice calling upon the assessee
to Show Cause as to why the proposed variation should not be made.
15. As impugned order has been passed over looking as safeguard
prescribed under the above provision, the Court is inclined to quash the
Impugned Order and remit the case back to the respondents to pass a
fresh order within a period of sixty (60) days from the date of receipt of a
copy of this order.
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W.P.No.12817 of 2021
16. The petitioner shall be heard in accordance with the procedure
prescribed in force. The respondents are directed to enable the portal to
facilitate the petitioner to file a reply within a period of thirty (30) days
from the date of receipt of a copy of this order.
17. The writ petition stands allowed with the above observations
and directions. No cost. Consequently, connected miscellaneous petitions
are closed.
19.07.2023
Neutral Citation: Yes/No
Speaking/Non-Speaking Order
rgm
https://www.mhc.tn.gov.in/judis
W.P.No.12817 of 2021
C.SARAVANAN, J.
rgm
To
1. The Income Tax Officer,
National e-Assessment Centre,
Income Tax Department,
Ministry of Finance,
Room No.401, 2nd Floor, E-Ramp,
Jawaharlal Nehru Stadium,
Delhi – 110 003.
2. The Assistant Commissioner of Income Tax,
Corporate Circle 3(1),
Wanaparthy Block,
No.121, Mahatma Gandhi Road,
Nungambakkam,
Chennai – 600 034.
W.P.No.12817 of 2021
and
W.M.P.Nos.13608, 13609, 17818 & 29336 of 2021
19.07.2023
https://www.mhc.tn.gov.in/judis
