The Gujarat High Court has quashed the Faceless Assessment Order due to breached of principles of natural justice, and disregarded statutory provision.
The petitioner, Gandhi Reality is a limited Company and is in the business of real estate business. For the A.Y. 1018-19 on 20.10.2018, it filed its return of income at loss of Rs.16.34 Crores (rounded off).
The order under section 144B is challenged on the ground that the procedure laid down under the said provision has not been followed while framing the assessment and thus, there is violation of provision of law and the same has been empathetically denied.
On 08.04.2021 Draft Assessment Order was placed for approval. According to the respondent, the said order had been served upon the assessee under communication dated 12.04.2021. The Draft Assessment Order along with computation-sheet also was forwarded to the assessee and the assessment under section 143(3) read with section 144B dated 20.04.2021 along with the Demand Notice has been served upon the petitioner.
It is claimed by the respondent that procedure contemplated under the provisions of section 144B has been duly complied with and from the date of issuance of notice under section 143(2) dated 22.09.2019 sufficient opportunities were granted to the assessee acceding to its request and hence, there is no question of any violation of principles of natural justice. The order of assessment raising demand of Rs.2.06 Crores (rounded off) was passed in terms of the provisions of the Act and with the remedy of appeal, this Court may not entertain the petition.
The division bench of Justice Sonia Gokani and Justice Rajendra M.Sareen has noted that NFAC if would have served upon the assessee the draft assessment order, its presence on web portal would invariably there. In virtual regime, noticing of or presence or absence of trail of action is not a herculian task. Thus, in absence of any proof, the version of the respondent simply cannot be accepted. We could further notice from the documents which have been furnished by the petitioner that authenticated copy of notice/ order is not served to the petitioner when otherwise all other documents on the web portal of the income tax department are existing.
“We have sought assistance from the learned advocate of both the sides to point out to us due service of the draft assessment order, as has been claimed by the respondent, however, the said order dated 12.04.21 has been duly served to the petitioner, show cause notice which is claimed to have been issued along with the draft assessment order are surely missing. This being a simple case of statutory non-compliance of the provision, the same would amount to breach of not only principles of natural justice, but also, of the action in complete disregard to the statutory provision. And therefore, the order of the respondent passed without following the mandate given by the statute under section 144B of the Act deserves to be interfered with by quashing and setting aside the same,” the court added.
The court quashed the impugned assessment order so also the notice of demand issued by the respondent authority and any other proceedings initiated pursuant to the said .
The court directed that the respondent/revenue will be at liberty to proceed with the assessment process under the provisions of Section 144B of the Act, as permissible under the law obviously after issuance of the prior notice-cum-draft assessment order and on availing an opportunity to the petitioner. The petitioner shall file a response and the objection to the same. Opportunity of hearing if is sought for, the same shall be accorded including opportunity of personal hearing. Let the procedure under section 144B of the Act be followed by the revenue scrupulously.
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