When there is a violation of principles of natural justice, the availability of an appellate remedy does not operate as a bar to the maintainability of the writ petition : Delhi High Court
An assessment order requires to meet all the requirements of the Act, which includes mandatory issuing of cause notice as well as draft assessment order. This was held in the judgment passed by a two judge bench comprising HON’BLE JUSTICES MR. JUSTICE MANMOHAN and MR. JUSTICE NAVIN CHAWLA, in the matter NOVELTY MERCHANTS PRIVATE LIMITED V. NATIONAL FACELESS ASSESSMENT CENTRE DELHI &amp; ORS., dealt with an issue where the petitioner filed a petition challenging the Assessment Order, Demand Notice and Notice for Penalty dated 23rd April 2021 passed by the respondents the Income Tax Act 1961 for the AY 2018-19. Counsel for the Petitioner states that the impugned assessment order has been passed without issuing the mandatory show-cause notice and draft assessment order under Section 144B(1)(xvi)(b) of the Act. He states that the Respondent’s action is violative of the principles of natural justice and Section 144B. He also states that in the absence of a show cause notice, the petitioner has been deprived of an opportunity to seek personal hearing. The Act states that the National Faceless Assessment Centre shall examine the draft assessment order in accordance with the risk management strategy specified by the Board, including by way of an automated examination tool. It also states that provide an opportunity to the assessee, in case any variation prejudicial to the interest of assessee is proposed, by serving a notice calling upon him to show cause as to why the proposed variation should not be made. The Court is also of the view that Section 144B(1)(xvi)(b) mandatorily provides for issuance of a show cause notice and draft assessment order before issuing the final assessment order.
IN THE HIGH COURT OF DELHI AT NEW DELHI NOVELTY MERCHANTS PRIVATE LIMITED Date of Decision: 02.09.2021 Through: Mr.Subash Agarwal Mr.Aneesh Mittal Adv NATIONAL FACELESS ASSESSMENT CENTRE DELHI EARLIER NATIONAL E ASSESSMENT CENTRE DELHI Through: Mr.Ajit Sharma Sr. Standing Counsel with Mr.Anant Ram Mishra Adv HON BLE MR. JUSTICE MANMOHAN HON BLE MR. JUSTICE NAVIN CHAWLA MANMOHAN J.read with Section 144B Section 156 and Section 274 read with Section 271AAC(1) of the Income Tax Act 1961for the AY 2018 19 Learned counsel for the Petitioner states that the impugned assessment order has been passed without issuing the mandatory show cause notice and draft assessment order under Section 144B(1)(xvi)(b) of the Act. He states that the Respondent’s action is violative of the principles of natural justice and Section 144B. He also states that in the absence of a show cause notice the petitioner has been deprived of an opportunity to seek personal hearing Issue Notice. Mr. Ajit Sharma accepts notice on behalf of the Learned counsel for the respondent states that the present writ petition is not maintainable as the petitioner has an alternative effective remedy by filing an appeal Having heard learned counsel for the parties this Court is of the view that once the assessment has been done by the respondent No. 1 National Faceless Assessment Centre Delhi it has to be in accordance with the statutory procedure prescribed for assessment by the said Authority and cannot be in accordance with the procedure prescribed under the earlier regime This Court is also of the view that Section 144B(1)(xvi)(b mandatorily provides for issuance of a show cause notice and draft assessment order before issuing the final assessment order. The relevant portions of Section 144B(1)(xvi)(b) as well as Section 144B(9) of the Act are reproduced hereinbelow: “144B. Faceless assessment xxxx xxxx xxx xvi) the National Faceless Assessment assessment order in accordance with the risk management strategy specified by the Board including by way of an automated examination tool whereupon it may decide to b) provide an opportunity to the prejudicial to the interest of assessee is proposed by serving a notice calling upon him to show cause as to why the proposed variation should not be made 9) Notwithstanding anything contained in any other provision of this Act assessment made under sub sectionon or after the 1st day of April 2021 shall be non est if such assessment is not made in accordance with the procedure laid down under this Since in the present case no prior show cause notice as well as draft assessment order have been issued there is a violation of principles of natural justice as well as mandatory procedure prescribed under “Faceless Assessment Scheme” and as stipulated in Section 144B of the Act It is a settled law that when there is a violation of principles of natural justice the availability of an appellate remedy does not operate as a bar to the maintainability of the writ petition Keeping in view the aforesaid the impugned Assessment Order Demand Notice and Notice for Penalty dated 23rd April 2021 issued under Section 143(3) Section 156 and Section 274 read with Section 271AAC(1) of the Act are set aside and the matter is remanded back to the Assessing Officer who shall issue a show cause notice as well as draft assessment order and thereafter pass a reasoned order in accordance with law 10. With the aforesaid direction the present writ petition along with pending applications stands disposed of MANMOHAN J NAVIN CHAWLA J SEPTEMBER 2 2021 rv Page 