INCOME TAX ACT, 1961

Sections 144B & 270A

Assessment - Faceless assessment - Validity - Assessment order passed without serving assessee with mandatory draft assessment order along with show cause notice

Assessee-company filed a writ petition challenging validity of assessment order passed under section 143(3) read with section 144B and consequential notices issued under section 156 and section 274 read with section 270A. It was stated that the assessment order was passed raising a substantial tax and interest demand, without serving the assessee with mandatory draft assessment order along with show cause notice, as contemplated in section 144B, although, the assessee's declared income was varied to its prejudice. Held: For framing assessment under section 143(3), in terms of section 144B(1)(xvi)(b), as it stood prior to amendment brought into effect by Finance Act, 2022, the National Faceless Assessment Centre (NaFAC), before making a variation to income, which is prejudicial to assessee, was mandated to provide an opportunity to the assessee to show cause as to why the proposed variation, should not be made and such a notice should be accompanied with draft assessment order, proposed to be passed. In instant case, admittedly, no show cause notice, as contemplated under section 144B(1)(xvi)(b) was served on the assessee, thereby depriving the assessee of its statutory right to file a response as well as place the documents on record in support of its response and to be heard before passing of final assessment order. Hence, the assessment passed under section 143(3) read with section 144B and consequential notices issued under section 156 and section 274 read with section 270A, were set aside.

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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