SAMDANI BUILDERS PRIVATE LIMITED V. UNION OF INDIA

CW/919/2023

AI Insights

The case involves Samdani Builders Private Limited, which challenged an assessment order and a demand notice issued by the National Faceless Assessment Centre (NaFAC) and other related tax authorities. The petitioner argued that the assessment order was passed without considering their adjournment request and response to a show cause notice, thus violating the principles of natural justice and the procedural requirements under Section 144B of the Income Tax Act. The respondents conceded that there was a miscommunication that led to the premature passing of the assessment order before the extended compliance date. The court found that the assessment order was indeed passed in contravention of the procedural requirements and natural justice, leading to its quashing and remittance of the matter for fresh assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 735410 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 30-01-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K K BISSA
• Assessee Lawyers: SHARAD KOTHARI
• Keywords: Adjournment request; Assessment Order; Faceless assessment; Natural Justice; Show cause notice
• Section: 144B; 156; 226

Judgement Text

"[2023/RJJD/002990] HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Civil Writ Petition No. 919/2023 Samdani Builders Private Limited, Registered Office At D-43, Shastri Nagar, Bhilwara, Through Its Director And Authorized Signatory Shri Balu Lal Samdani S/o Late Shri Gishu Lal Samdani, Aged 71 Years, Resident Of D-43, Shastri Nagar, Bhilwara - 311001. ----Petitioner Versus 1. Union Of India, Through Secretary Finance, Ministry Of Finance, North Block New Delhi - 110001. 2. Chairman, Central Board Of Direct Taxes North Block, Secretariat Building New Delhi - 110001. 3. Principal Chief Commissioner Of Income Tax (Nafac), North Block, New Delhi - 110001 4. The Assessment Unit, National Faceless Assessment Centre North Block, New Delhi - 110001. 5. Income Tax Officer, Ward-1, Bhilwara. ----Respondents For Petitioner(s) : Mr. Sharad Kothari. For Respondent(s) : Mr. K.K. Bissa. HON'BLE MR. JUSTICE SANDEEP MEHTA HON'BLE MR. JUSTICE RAJENDRA PRAKASH SONI Order 30/01/2023 1. The petitioner assessee has preferred the instant writ petitioner under Article 226 of the Constitution of India for assailing the assessment order (Annexure-17) dated 21.12.2022 passed by the respondent No.4 National Faceless Assessment Centre North Block, New Delhi (hereinafter referred to as ‘the NaFAC’) against the petitioner for the Accounting Year 2021-22. [2023/RJJD/002990] (2 of 7) [CW-919/2023] 2. Advance notice of the writ petition was provided to Shri K.K. Bissa, Advocate who puts in appearance on behalf of the respondents. In view of the prevailing factual situation, Shri Bissa submits that he does not propose to file formal reply and the matter may be proceeded without the same. However, he has filed the parawise comments received from the Department on record. Thus, with the consent of the learned counsel representing the parties, the writ petition is being heard and decided finally on the basis of the pleadings of the petitioner and the admitted documents available on record. 3. The controversy involved in the writ petition hinges around the assessment order (Annexure-17) dated 21.12.2022 and the demand notice (Annexure-18) dated 21.12.2022 issued by the Assessment Unit without considering reply/objections of the petitioner. Shri Sharad Kothari, Advocate representing the petitioner, highlighted the scheme/procedure of assessment as prescribed under Section 144B of the Income Tax Act as below: “a. NaFaC issues initial requisition notice to the assessee at the request of Assessment Unit; b. Assessee’s response to the initiation of proceedings is submitted to NaFaC to be further sent to Assessment Unit; c. On the basis of initial exchanges and material available on record [Section 144B(1)(xii)], Assessment Unit has to serve a show cause notice to the assessee through NaFaC; d. In response thereto, Assessee is statutorily empowered to either immediately reply to the Show Cause Notice or seek extended time for doing so [Section 144B(1)(xiii)]; [2023/RJJD/002990] (3 of 7) [CW-919/2023] e. Further the statute requires the NaFaC to intimate the Assessment Unit as regards the failure of the assessee to furnish response [Section 144B(1)(xiv)]; f. On the basis of the response so received and on the basis of material available on record, the Assessment unit is required to prepare an income or loss determination proposal and forward the same to NaFaC [Section 144B(1) (xv)]; g. Once NaFaC approves the draft assessment order, it will direct the Assessment Unit to prepare final order [Section 144B(1)(xxii)]; h. Once, final order is received by the NaFaC, the has to be communicated to the assessee [Section 144B(1)(xxii)].” A grievance is raised in the writ petition against the failure of the NaFAC to forward the adjournment application of the petitioner to the Assessment Unit thereby resulting into passing of the impugned assessment order (Annexure-17) dated 21.12.2022 before the petitioner could submit its reply to the show cause notice (Annexure-14) dated 07.12.2022. It has been highlighted in the writ petition that similar and bonafide adjournment applications earlier submitted by the petitioner assessee were duly entertained and time period for filing response at different stages of the proceedings was extended. It is emphasized in the writ petition that the assessment order was passed with a factually incorrect observation that the assessee neither filed any adjournment application nor any response to the show cause notice. Learned counsel Shri Kothari submitted that the show cause notice (Annexure-14) dated 07.12.2022 proposing to make variations in income prejudicial to the interest of the assessee was received by the assessee and the date for filing the return thereto was intimated as 12.12.2022. The assessee immediately [2023/RJJD/002990] (4 of 7) [CW-919/2023] forwarded an adjournment request dated 12.12.2012 request to the NaFAC was taken on record and the reason for seeking adjournment was mentioned as “gathering of material from multiple sources which would require time”. The adjournment was sought till 24.12.2022 and the window for filing reply was shown open on the Income Tax e-portal till that date. However, before the assessee could file its response during the extended period, the impugned assessment order (Annexure-17) came to be passed on 21.12.2022. It was submitted by Shri Kothari that in this assessment order, details earlier submitted on record by the petitioner were not considered and a non-speaking order was passed followed by a demand notice under Section 156 of the Income Tax Act (Annexure-18) dated 21.12.2022. Shri Kothari further submitted that immediately on receiving intimation regarding passing of the assessment order, the petitioner raised a grievance to the NaFAC wherein, the category of the grievance was mentioned as assessment related technical issues. However, the Jurisdictional Officer disposed of the grievance by order dated 28.12.2022 assigning the following reasons: “As per available data Final Order has been passed, user cannot do anything.” Shri Kothari urged that the impugned assessment order has been passed without providing opportunity of filing response to the assessee, the same is vitiated as being in contravention of the mandate of Section 144B(f) of the Income Tax Act and also breaches the principles of natural justice. He thus urged that the assessment order as well as the demand notice deserve to be [2023/RJJD/002990] (5 of 7) [CW-919/2023] quashed while exercising powers of judicial review conferred upon this Court by Article 226 of the Constitution of India. 4. Shri K.K. Bissa, learned counsel representing the Income Tax Department, very fairly conceded that the adjournment application dated 12.12.2022 forwarded by the petitioner to NaFAC in response to the show cause notice (Annexure-14) dated 07.12.2022 was taken on record and the status was shown open till 24.12.2022 and thus, it was essential for the respondent no.4 to have waited till 24.12.2022 before proceeding to pass the assessment order. He pointed out that as per the procedure prevailing in the newly introduced faceless regime under the Income Tax Act, the request for adjournment or any other prayer for that matter is received by the NaFAC which is required to transmit the same to the Assessment Unit concerned. He submitted that there seems to have been some mis-communication owing to which, the request made by the assessee to adjourn the matter though taken on record was not communicated to the Assessment Unit. During the course of arguments, Shri Bissa submitted that the faceless regime is in the initial teething period and thus, these mistakes are happening inadvertently and that the Department is purposefully working for ensuring that such mistakes do not reoccur in future. Shri Bissa fairly suggested that the impugned assessment order as well as the demand notice may be set aside and the matter be remanded to the Assessment Unit who would, after taking on record the response of the assessee, decide the matter [2023/RJJD/002990] (6 of 7) [CW-919/2023] afresh. Shri Bissa has placed on record the parawise comments received from the department through email at point No.23(A) whereof is mentioned as below: “Yes, the assessment order as well as the demand notice dated 21.12.2022 appear to be in contravention of the principle of natural justice as it is evident that the next hearing/compliance dated was 24.12.2022. However, it appears that the assessment unit has bonafidely failed to see the same and passed the assessment order on 21.12.2022 itself i.e. before the next hearing/compliance date fixed for 24.12.2022.” 5. Having considered the submissions advanced at bar and after going through the documents placed on record, we are of the view that the impugned assessment order seems to have been passed prematurely because of a technical glitch/mis- communication between the NaFAC and the Assessment Unit concerned. 6. Having considered the submissions advanced at bar and after going through the documents placed on record, it is apparent that though the request for adjournment forwarded by the petitioner assessee was received by the NaFAC and the portal for filing reply/ compliance was kept open till 24.12.2022, however, the Assessment Unit was not communicated of the adjournment request resulting into the assessment order (Annexure-17) dated 21.12.2022 being passed without providing appropriate opportunity to the assessee for filing reply/response to the show cause notice. As such, the impugned assessment order (Annexure-17) dated 21.12.2022 is in breach of the mandate of Section 144B(f) of the Income Tax Act. [2023/RJJD/002990] (7 of 7) [CW-919/2023] 7. Consequently, the impugned assessment order (Annexure- 17) dated 21.12.2022 and the demand notice (Annexure-18) dated 21.12.2022 having been passed without providing opportunity of filing reply to the party, cannot be sustained and are hereby quashed. The matter is remitted to the Assessment Unit for fresh consideration and decision as per law. The action as directed above shall be completed within a period of two months from today after providing appropriate opportunity of filing reply and hearing as per law to the petitioner assessee. 8. The writ petition is allowed in these terms. 9. No order as to costs. (RAJENDRA PRAKASH SONI),J (SANDEEP MEHTA),J 42-Tikam/- "