Gujarat HC Quashes Assessment order for Violation of Section 144B of Income Tax Act [Read Order]

The Gujarat High Court quashed an assessment order for violation of section 144B of the Income Tax Act, 1961.

The counsel for the Respondent Varun Patel,   referred to the affidavit filed by Mr. Manish H. Dafda, Income Tax Officer Ahmedabad. The counsel argued that, upon reviewing the ITBA order-sheet, it was apparent that the assessment order had been issued without serving a draft order to the petitioner. Urging the court to take necessary action, the counsel emphasized the need for an appropriate order in light of this information.

The counsel for the petitioner Darshana R. Patel highlighted that there was no evidence presented by the respondent to indicate that the show cause notice, along with the draft assessment order, had been served upon the writ applicant. Variations from the return filed by the writ applicant, particularly regarding disallowance, were observed in the impugned assessment order

The Section 144B of the Income Tax Act has been introduced with the objective of ensuring that the assessment process is transparent, efficient and fair. This provision has been widely welcomed by taxpayers as it provides them with an opportunity to present their case in front of the DRP and get their grievances addressed.

The Section 144B Income Tax Act has brought in more transparency in the assessment process. The pre-show cause notice issued by the assessing officer and the recommendations provided by the DRP have to be provided in writing, which helps the taxpayer to understand the reasons for the proposed additions or disallowances.

The division bench of Justice Biren Vyshnav and Justice Nisha M.Thakore observed that the specific circumstances of this case, the contested final assessment order dated 30.03.2022, issued by the respondent authorities, was deemed non-existent.

Consequently, the demand notice dated 30.03.2022, served by the respondent authorities under Section 144 of the Income Tax Act to the writ applicant, was also nullified. The case was sent back to the Assessing Officer, commencing from the stage of issuing the draft assessment order along with the show cause notice. The Assessing Officer was expected to generate a draft assessment order and subsequently forward it to the assesse, adhering to the provisions outlined in Section 144B of the Income Tax Act.

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