Monarch No. 54, Monarch Plaza, Brigade Road, Bangalore 560 001 V. National Faceless Assessment Centre, Delhi and Central Board of Direct Taxes, Ministry of Finance and Union of India, Ministry of Finance

WP/15980/2021

AI Insights

The case involves M/s Monarch No. 54, the petitioner, who challenged the assessment order issued by the National Faceless Assessment Centre under the Income Tax Act, 1961. The petitioner argued that the assessment was conducted without considering their reply and documents, which were allegedly filed but not acknowledged by the assessing officer. The respondents defended the validity of the assessment order, emphasizing the presumption of correctness in public duties. The court, however, found procedural lapses in the assessment process, particularly the failure to issue a revised draft assessment order and the non-consideration of the assessee's submissions, leading to the quashing of the assessment order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 798516 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 09-08-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M DILIP; K V ARAVIND
• Assessee Lawyers: RAGHURAMAN; RAGHAVENDRA
• Keywords: Assessment Order; Faceless assessment; Income Tax; Natural Justice; Writ petition
• Section: 143(3); 144B; 156

Judgement Text

" - 1 - NC: 2023:KHC:28126 WP No. 15980 of 2021 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 9TH DAY OF AUGUST, 2023 BEFORE THE HON'BLE MR JUSTICE KRISHNA S DIXIT WRIT PETITION NO. 15980 OF 2021 (T-IT) BETWEEN: M/S MONARCH NO. 54, MONARCH PLAZA, BRIGADE ROAD, BANGALORE 560 001, (REP BY SHRI. DAWOOD MOHAMMED, PARTNER, AGED ABOUT 69 YEARS, S/O. MOHAMMED DAWOOD) …PETITIONER (BY SRI. RAGHURAMAN V., SENIOR COUNSEL A/W SRI. RAGHAVENDRA C R.,ADVOCATE) AND: 1. NATIONAL FACELESS ASSESSMENT CENTRE, DELHI (REPRESENTED BY PRINCIPAL COMMISSIONER OF INCOME TAX-1), BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BANGALORE 560 095. 2. CENTRAL BOARD OF DIRECT TAXES MINISTRY OF FINANCE, REP BY CHAIRMAN, DEPARTMENT OF REVENUE, D-1/35, NORTH BLOCK, NEW DELHI 110 001. 3. UNION OF INDIA MINISTRY OF FINANCE, REP BY SECRETARY, NORTH BLOCK, NEW DELHI 110 001. …RESPONDENTS (BY SRI.M DILIP., ADVOCATE FOR SRI.K V ARAVIND.,ADVOCATE FOR R1 & R2) Digitally signed by SHARADA VANI B Location: HIGH COURT OF KARNATAKA - 2 - NC: 2023:KHC:28126 WP No. 15980 of 2021 THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO DECLARE THAT SECTION 144B OF THE INCOME TAX ACT, 1961, ENCLOSED AS ANNX-A, BE STRUCK DOWN AS VIOLATIVE OF ARTICLE 14/19/300A OR IN THE ALTERNATIVE BE READ DOWN TO MANDATORILY INCLUDE THE FOLLOWING OF THE PRINCIPLES OF NATURAL JUSTICE IN THE SCHEME OF FACELESS ASSESSMENT AND ETC., THIS PETITION COMING ON FOR PRELIMINARY HEARING IN B GROUP THIS DAY, THE COURT MADE THE FOLLOWING: ORDER Petitioner, an Assessee is knocking at the doors of Writ Court for the quashment of Assessment Order dated 21.4.2021 issued by the first respondent at Annexure-B for the Assessment Year 2018-19; this order has been made u/s 143(3) read with section 144B of the Income Tax Act, 1961, specifying the Returned Income in a sum of Rs.45,80,320/- (Rupees Forty Five Lakh Eighty Thousand & Three Hundred Twenty). Petitioner also seeks the quashment of the consequential demand notice issued u/s 156 of the Act. 2. Learned Sr. Advocate appearing for the petitioner stoutly argues that the impugned order is made - 3 - NC: 2023:KHC:28126 WP No. 15980 of 2021 in gross violation of the principles of natural justice inasmuch as the author of the order proceeds on a wrong premise that the Assessee had not filed his reply to the statutory notice, when the Website of the department reflects the filing of the reply accompanied by several documents. Secondly, he argues that impugned order of the kind could not have been made sans a Revised Draft Assessment Order in terms of Section 144B(1)(xiv) of the Act. 3. Learned Panel Counsel appearing for the revenue opposes the Petition with equal vehemence making submission in justification of the impugned order and the consequential notice. He hastens to add that in the absence of any malafide being alleged against the officials discharging the statutory functions, ordinarily, their version should be taken as true and correct. He further contends that there is a legal presumption of validity of functions done in discharge of public duties. So contending, he seeks dismissal of the Writ Petition. - 4 - NC: 2023:KHC:28126 WP No. 15980 of 2021 4. Having heard the learned counsel for the parties and having perused the Petition Papers, this court is broadly in agreement with the submission made on behalf of the Assessee inasmuch as the very official Website itself demonstrates the filing of reply and copies of documents that accompanied the same. Had the author of the impugned order adverted to the Website, he would not have proceeded on the wrong premise that no reply is filed, as rightly submitted by learned Sr. Advocate appearing for the Assessee. Even otherwise, by way of abundant caution, he could have ascertained from the Assessee as to the filing of reply, more particularly when the stakes involved was high. Thus, there is a gross violation of principles of natural justice namely the version of the Assessee has remained unconsidered because of non-application of mind by the authority concerned. That is the first lacuna apparent on the face of the impugned order. 5. Learned Sr. Advocate appearing for the petitioner-Assessee is also justified in pointing out that for - 5 - NC: 2023:KHC:28126 WP No. 15980 of 2021 passing of the impugned order of the kind, making of a revised Draft Assessment Order is a sine qua non by virtue of Section 144B(1)(xiv) of the Act. The very text & context of this provision makes it abundantly clear leaving no scope for contra argument. Such a procedure is prescribed by the Parliament in its wisdom to serve the cause of Assessees who will have an opportunity to have their say over the Revised Draft Assessment. Thus, there is an added error apparent on the face of the impugned order. In the above circumstances, this Writ Petition is allowed; a Writ of Certiorari issues quashing the impugned Assessment Order and the consequential notice of demand respectively at Annexures-B & C. Matter is remitted for consideration afresh in accordance with law, all contentions having been kept open. Costs made easy. Sd/- JUDGE Bsv/ List No.: 1 Sl No.: 28 "