The Income Tax authorities have to remain bound by the Statutory Scheme of assessment: High Court of Delhi.
The Absence of a provision akin to Section 144B (9) in the E-Assessment Scheme, 2019 would not make any difference to such legal outcome in as much as the violation of principles of natural justice renders such decision void. A divisional Judge bench comprising Hon’ble Justice Manmohan and Justice Navin Chawla, in the matter of RMSI Private Limited Vs. National E-Assessment Centre, Delhi (CM APPL. 20366/2021), dealt with an issue where a petition has been filed challenging the Assessment Order dated 31.03.2021 passed under Section 143(3) read with Sections 143(3A) and 143(3B) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) against the petitioner under the E-Assessment Scheme, 2019 for the Assessment Year 2017-18. In the present case, the counsel for the petitioner submitted that the Impugned Assessment Order is liable to be set aside inasmuch as it is not preceded by the issuance of a ‘Draft Assessment Order’ followed by a ‘Revised Draft Assessment Order’. The notice issued by the petitioner was accepted by the respondent. The counsel for the respondent raised questions on the maintainability of the petition by stating that the petitioner had already challenged the impugned assessment order by way of an appeal. The counsel for the respondent further submitted that issuance of a Draft Assessment Order cannot be held to be mandatory and failure to issue such order cannot be treated as fatal. To this, the counsel for the petitioner submitted that the present petition is maintainable because the appeal that was filed was only to ensure that the period of limitation was not crossed. Further, the counsel pointed out that because such impugned order was passed without Jurisdiction, the petitioner had the remedy to file a writ petition. Further, the counsel submitted that absence of a provision akin to Section 144B (9) of the Act from the Scheme would not be of much relevance, as the scheme was framed under Section 143(3A) and the authorities have to mandatorily follow it. The court observed that- “that it is mandatory for the National E-Assessment Centre to provide an opportunity to the assessee, by serving a notice calling upon him to show cause as to why the variation proposed in the Draft Assessment Order, which is prejudicial to the interest of the assessee, be not made.” Further, the court pointed that the absence of such notice is a clear violation of the principle of natural justice leading to the Assessment Order passed being declared void. The court also observed that since the petitioner had already availed the remedy of appeal, thereby the present petition was liable to be rejected. The court observed that the writ petition was maintainable because the impugned order was passed without complying with the procedures mentioned in the scheme and such was also in violation of the principles of natural justice. However, the respondent/Revenue was given liberty to pass a fresh Assessment Order in accordance with the law. The petitioner shall also have the liberty to challenge any action of the respondent/Revenue in accordance with the law, in the event that it is aggrieved by the same. Thereby the court disposed of the writ petition and the other pending application. Click Here For The Judgement
IN THE HIGH COURT OF DELHI AT NEW DELHI Date of Decision: 14.07.2021 W.P.(C) 6482 2021 & CM APPL. 20366 2021 RMSI PRIVATE LIMITED Through Mr.Piyush Kaushik Adv. ..... Petitioner NATIONAL E ASSESSMENT CENTRE DELHI Respondent Through Mr.Puneet Rai Sr. Standing Counsel with Ms.Adeeba Mujahid Adv. Jr. Standing HON BLE MR. JUSTICE MANMOHAN HON BLE MR. JUSTICE NAVIN CHAWLA NAVIN CHAWLA J.The petition has been heard by way of video conferencing. This petition has been filed by the petitioner challenging the Assessment Order dated 31.03.2021 passed under Section 143(3) read with Sections 143(3A) and 143(3B) of the Income Tax Act 1961 hereinafter referred to as the ‘Act’) against the petitioner under the E Assessment Scheme 2019 for the Assessment Year 2017 18. The learned counsel for the petitioner submits that the Impugned Assessment Order is liable to be set aside inasmuch as it is WP(C) No.6482 2021 not preceded by the issuance of a ‘Draft Assessment Order’ followed by a ‘Revised Draft Assessment Order’. Issue notice. Notice is accepted by Mr. Puneet Rai learned counsel for the respondent. He raises a preliminary objection on the maintainability of the present petition contending that the petitioner has already challenged the impugned assessment order by way of an appeal. He further submits that in absence of a provision akin to Section 144B of the Act issuance of a Draft Assessment Order cannot be held to be mandatory and failure to issue such order cannot be treated as fatal. As far as the maintainability of the present petition is concerned the learned counsel for the petitioner submits that the said appeal was filed only to ensure that the period of limitation is not crossed. He submits that as the impugned order has been passed without jurisdiction the remedy of a writ petition would be available to the petitioner. In support of his submission he places reliance on the judgment dated 04.06.2021 passed by the predecessor Bench of this Court in Gurgaon Realtech Limited vs. National Faceless Assessment Centre Delhi W.P.(C) No. 5849 2021. He further submits that absence of a provision akin to Section 144Bof the Act from the Scheme would not be of much relevance in as much as the Scheme has been framed under Section 143(3A) of the Act and is mandatory to be followed by the Authorities. WP(C) No.6482 2021 6. We have considered the submissions made by the learned counsels for the parties. It is not denied by the learned counsel for the respondent that the Impugned Assessment Order was not preceded by the Draft Assessment Order. Clause 5 (viii) and of the E Assessment Scheme 2019 are reproduced hereinunder: “5. Procedure for assessment. The assessment under this Scheme shall be made as per the following procedure namely: viii) the assessment unit shall after taking into account all the relevant material available on the record make in writing a draft assessment order either accepting the returned income of the assessee or modifying the returned income of the assesse as the case may be and send a copy of such order to the National e assessment Centre in accordance with the National e assessment Centre x) the draft assessment shall examine the risk management strategy specified by the including by way of an Board automated examination tool whereupon it may decide to WP(C) No.6482 2021 a) finalise the assessment as per the draft assessment order and serve a copy of such order and notice for initiating penalty proceedings if any to the assessee alongwith 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 assessee in case a modification is proposed by serving a notice calling upon him to show cause as to why the assessment should not be completed as per the draft assessment order or c) assign the draft assessment order to a review unit in any one Regional e assessment Centre through an automated allocation system for conducting review of such order ” Emphasis supplied) A reading of the above provision would clearly show that it is mandatory for the National E Assessment Centre to provide an opportunity to the assessee by serving a notice calling upon him to show cause as to why the variation proposed in the Draft Assessment Order which is prejudicial to the interest of the assessee be not made. 10. Absence of such notice would clearly be a violation of the principles of natural justice leading to the Assessment Order passed being declared void. WP(C) No.6482 2021 11. Absence of a provision akin to Section 144B in the E Assessment Scheme 2019 would not make any difference to such legal outcome in as much as violation of principles of natural justice renders such decision void. Even otherwise the Income Tax authorities have to remain bound by the Statutory Scheme of 12. As far as the objection on the maintainability of the present petition on account of the petitioner having already availed of the remedy of the appeal the same is also liable to be rejected. In Gurgaon Realtech Limitedthis Court had negatived a similar objection observing as under: “9.1 To our minds if the challenge to the assessment order is made on the ground that it was passed without jurisdiction then notwithstanding the fact that an appeal was filed albeit only to ensure that the limitation is not crossed proceeding ahead with the matter…. xxxx ” is not an In the present case as well the impugned Assessment Order having been passed without complying with the procedure laid down in the Scheme and in violation of principles of natural justice the writ petition would be maintainable. 14. Consequently Impugned Assessment Order dated 31.03.2021 passed under Section 143(3) read with Sections 143(3A) and 143(3B) of the Act is set aside. However the respondent Revenue WP(C) No.6482 2021 is given liberty to pass a fresh Assessment Order in accordance with law. The petitioner shall also have liberty to challenge any action of the respondent Revenue in accordance with law in the event that it is aggrieved by the same. 15. Accordingly the present Writ Petition and the pending application stand disposed of. 16. The order be uploaded on the website forthwith. Copy of the order be also forwarded to the learned counsel through e mail. JULY 14 2021 NAVIN CHAWLA J MANMOHAN J WP(C) No.6482 2021 