HC set-aside faceless assessment order as it was passed without issuing draft assessment order

Case details: Anju Jalaj Batra v. National E-Assessment Centre - [2021] 128 taxmann.com 165 (Delhi)

Judiciary and Counsel Details

• • Manmohan and Navin Chawla, JJ.
  • Salil Kapoor, S.K. Gambhir, C.S. Anand, Sumit Lalchandani and Ms. Ananya Kapoor, Advs. for the Petitioner
  • Sanjay Kumar, Adv. for the Respondent.

Facts of the Case

Assessee was issued a notice under Section 142(1), to which assessee replied and furnished relevant details or explanations. Despite assessee’s replies, National e-assessment Centre (NeAC) issued an assessment order without issuing a mandatory draft assessment order or a show-cause notice. Revenue submitted that though no show cause notice-cum-draft assessment order was issued, yet several opportunities had been granted by NeAC to assessee to explain its case.

Assessee contended that the argument of revenue was contrary to the statutory scheme. Section 144B specifically provides for the issuance of a draft assessment order before the finalisation of the assessment. It further provides that assessment made under Section 143(3) or under section 144, on or after 01-04-2021, shall be non-est if such assessment is not made in accordance with the procedure laid down under this section.

High Court Held

On writ, Delhi High Court held that assessee was correct in submitting that Section 144B was violated. The assessment proceeding had been completed in violation of the principles of natural justice. Consequently, assessment orders issued under section 144 read with Section 144B as well as demand notice issued under Section 156 and notice for initiating penalty proceedings issued under Section 270A and Section 271AAC(1) were liable to be set aside. However, revenue was given liberty to pass a fresh assessment order in accordance with the law. Assessee was also given liberty to challenge any action of revenue in the event she is aggrieved by the same.