MAA SAMALESWARI EDUCATIONAL AND WELFARE TRUST V. ASSESSING OFFICER, ASSESSMENT UNIT, INCOME TAX DEPT.

WP(C)/28664/2022

AI Insights

The case involves Maa Samaleswari Educational and Welfare Trust, the petitioner, challenging an assessment order and a consequential demand notice issued by the Income Tax Department for the Assessment Year 2020-21. The primary legal contention raised was the failure to comply with the procedural requirement of issuing a draft assessment order under Section 144B of the Income Tax Act, 1961, before finalizing the assessment. The court noted that this requirement was mandatory and had been established in several precedents. The Department did not contest the absence of the draft assessment order, leading the court to quash the assessment order and the demand notice, allowing the Department to proceed afresh in accordance with the law.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 747806 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 02-02-2023
• Assessment Year: misc
• Other Referred Cases: Sribasta Kumar Swain v. Union of India, Kshamta Foundation, Sundargarh v. Income Tax Officer, National Faceless Assessment Centre, New Delhi, Enviro Control Private Limited v. National E.Assessment Centre, P.T. Lee Chengalvaraya Naicker Trust, Chennai v. Income Tax Officer
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: RADHESHEYAM CHIMANKA; AVINASH KEDIA
• Assessee Lawyers: SIDHARTHA RAY
• Keywords: Draft Assessment Order; Mandatory requirement; Quashed assessment order; Consequential demand notice
• Section: 144B; 144B(xiv)

Judgement Text

" Page 1 of 3 IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.28664 of 2022 Maa Samaleswari Educational and Welfare Trust …. Petitioner Mr. Sidhartha Ray, Sr. Advocate -versus- Assessing Officer, Assessment Unit, Income Tax Department, New Delhi …. Opposite Parties Mr. Radhesheyam Chimanka, Sr. Standing Counsel with Mr. Avinash Kedia, Jr. Standing Counsel CORAM: THE CHIEF JUSTICE JUSTICE M. S. RAMAN Order No. ORDER 02.02.2023 Dr. S. Muralidhar, CJ. 02. 1. On 1st November, 2022, the following order was passed in the present petition: “One of the contentions raised by the learned counsel for the Petitioner is that the mandatory requirement of passing a draft order under Section 144B of the Income Tax Act, 1961 has not been complied with in the present case. 2. Issue notice. Mr. Radheshyam Chimanka, learned Senior Standing Counsel accepts notice on behalf of the Opposite Party and prays for time to seek instructions in the matter. Learned counsel for the Petitioner shall serve extra copy of the writ petition as well as I.A. on him within three days. Page 2 of 3 3. List on 2nd February, 2023. Till then, no coercive action shall be taken against the Petitioner. 4. Issue urgent certified copy of this order as per rules” 2. Till date, no reply has been filed by the Department. Therefore, no denial of the fact that no draft assessment order as required under Section 144B of the Income Tax Act, 1961 (IT Act) has been issued to the Assessee in the present case. It must be noticed here that the assessment order dated 26th September, 2022, challenged in the present petition, has been passed for Assessment Year 2020-21 and it has resulted in the consequential demand notice (Annexure-1/A). 3. The show cause notice issued on 2nd September, 2022 was not accompanied by the draft assessment order as mandated under Section 144B(xiv) of the IT Act. 4. The issue is no longer res integra as far this Court is concerned. In several judgments it has been held that the above provision which was inserted with effect from 1st April, 2021 has to be mandatorily complied with. A sampling of such orders includes the order dated 1st October, 2021 of this Court in W.P.(C) No.29279 of 2021 (Sribasta Kumar Swain v. Union of India), the orders dated 11th July, 2022 and 27th October, 2022 of this Court in W.P.(C) No.14008 of 2022 (Kshamta Foundation, Sundargarh v. Income Tax Officer, National Faceless Assessment Centre, New Delhi), the judgment of the Gujarat High Court in R/Special Civil Application No.7370 of 2021 (Enviro Control Private Limited v. National E.Assessment Centre) and the judgment dated 30th September, 2022 Page 3 of 3 of the Madras High Court in W.P.(C) No.16373 of 2022 (P.T. Lee Chengalvaraya Naicker Trust, Chennai v. Income Tax Officer). 5. In that view of the matter, the impugned assessment order and the consequential demand notice (Annexures-1 and 1/A) are hereby quashed. This will, however, not prevent the Department from proceeding afresh in accordance with law hereafter. 6. The writ petition is disposed of in the above terms. (Dr. S. Muralidhar) Chief Justice (M. S. Raman) Judge MRS/Laxmikant "