The Bombay High Court while coming down heavily on the Tax Official, imposed the substantial costs on AO and quashed the Faceless Assessment orders passed without application of mind.
The petitioner, Mantra Industries Ltd had assailed the Income Tax department’s initialization of penalty proceedings against it under Section 274 read with Section 270A of the Income Tax Act, 1961.
The petitioner contended that the assessment order was passed without following the principles of natural justice in as much as its request for an adjournment had not been considered and a request for a personal hearing had not been considered. Most importantly, the reply and objection filed in response to the show-cause notice with the draft assessment order had not been considered, the company contended.
The division bench of justice KR Shriram and justice Amit B Borkar said, “Respondents are put to notice, and Akhileshwar Sharma (counsel for National Faceless Assessment Centre-NFAC-set up by the Central Board of Direct Taxes-CBDT) to circulate this order right from the revenue secretary to everybody in the finance ministry, that if such orders are continued to be passed, this court will be constrained to impose substantial costs on the concerned assessing officer (AO) to be recovered from his or her salary and also direct the department to place such judicial orders in the career records of such assessing officer.”
“The assessment order is an exact reproduction of the draft assessment order except for one sentence which has been added ‘Regarding this show cause notice issued to the assessee on 22 April 2021, but assessee has not given any justification for non-furnishing of quantitative details in form 3CD’,” the bench said.
The bench says, “We have compared the details provided by Mantra Industries and form 35(b) annexed to the affidavit in rejoinder. We do not find any difference except that in the response dated 27 April 2021, the product manufactured, wet grinders, is mentioned. We have also to note that this is not the case in the assessment order, which has proceeded on the basis that no response at all has been filed to the notice dated 22 April 2021. There cannot be anything far from the truth.”
The HC says it is compelled to set aside the impugned order passed on 8 June 2021 and also the consequential notices issued by the tax authorities. “Sub-section 9 of section 144B of the Income Tax Act provides that any assessment made shall be non-est (the return of a writ or process) if such assessment is not made in accordance with the procedure laid down under this section.
“Therefore, the impugned order being non-est, the AO may take such steps as advised in accordance with the law. We are not making any observations on the merits of the case,” the bench says while disposing of the petition.
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