Sumeet Gems And Jewellers Pvt. Ltd. V. Principal Chief Commissioner Of Income Tax National Faceless Assessment Centre and Chief Commissioner Regional Faceless Assessment Centre and Principal Commissioner Of Income Tax Regional Faceless Assessment Centre and Assistant Commissioner Of Income Tax (Acit) National Faceless Assessment Centre

WPT/87/2021

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M/s Sumeet Gems And Jewellers Pvt. Ltd. filed a writ petition against the assessment order passed under Section 143(3) of the Income Tax Act, 1961, claiming that the procedure prescribed under Section 144B was not followed, making the assessment non-est. The petitioner argued that they were not given a show-cause notice or an opportunity of hearing as required under the Faceless Assessment Scheme. The respondents contended that the assessment order was appealable and that the petitioner had not availed the alternative remedy. The court found that the petitioner had an alternative remedy and thus dismissed the writ petition, emphasizing the importance of exhausting statutory remedies before approaching the court.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 680216 (HC-CHHATTISGARH)
• Appeal Type: Others
• Pronouncement Date: 04-05-2022
• Assessment Year: misc
• Other Referred Cases: Bharat Aluminum Co. Ltd. Vs Union of India, Gandhi Realty (India) Pvt. Ltd. vs. Assistant/Joint/Deputy/Assistant Commissioner of Income Tax/ Income Tax Officer
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: AMIT CHAUDHARY
• Assessee Lawyers: NEELABH DUBEY; SMITI SHARMA
• Keywords: Assessment Order; Efficacious Alternative Remedy; Faceless Assessment Scheme; Non compliance; Show cause notice
• Section: 143(3); 139(1); 144B; 271AAC(1)

Judgement Text

"1 NAFR HIGH COURT OF CHHATTISGARH, BILASPUR Order reserved on 12.04.2022 Order delivered on 04/05/2022 WPT No. 87 of 2021 • M/s Sumeet Gems And Jewellers Pvt. Ltd. A Company Duly Incorporated Under The Provisions Of Companies Act , 1956 And Companies Act , 2013 Having Its Office At Tahir Plaza, Malviya Road, Raipur 492001 Through Its Authorized Signatory And Director , Ankit Kankariya, S/o Shri Ashok Kumar Kankariyaaged About 31 Years, R/o Sumeet , 21/447, Opp. Holy Hearts School, Civil Lines, Raipur 492001. ---- Petitioner Versus 1. Principal Chief Commissioner Of Income Tax National Faceless Assessment Centre, Room No. 401, 2nd Floor, E Ramp, Jawaharlal Nehru Stadium , New Delhi 110003 2. Chief Commissioner Regional Faceless Assessment Centre, Aayakar Bhawan, White Church Road Indore Madhya Pradesh., District : Indore, Madhya Pradesh 3. Principal Commissioner Of Income Tax Regional Faceless Assessment Centre, Aayakar Bhawan, Central Revenue Buildings, Civil Lines Raipur Chhattisgarh. 4. Assistant Commissioner Of Income Tax (Acit) National Faceless Assessment Centre, Room No. 401, 2nd Floor, E Ramp Jawarharlal Nehru Stadium, New Delhi 110003 ---- Respondents For Petitioner : Mr. Neelabh Dubey & Ms. Smiti Sharma, Advocates For Respondents : Mr. Amit Chaudhary, Advocate Hon'ble Mr. Justice Parth Prateem Sahu C A V Order 1. Petitioner company aggrieved by the order of assessment under Section 143 (3) of the Income Tax Act, 1961 (for short ‘the Act of 1961’) passed on 17.4.2021 has approached this Court by filing instant 2 writ petition seeking following reliefs:- “10.1. Calling for the records of the case. 10.2. Quashing order of the Assessing Officer, dated 17.04.2021 being Annexure P/15 as being illegal and arbitrary. 10.3. Quashing all consequential demand notices including demand notice dated 17.04.2021 being Annexure P/16 . 10.4. Quashing the notice initiating penalty proceedings under S. 271AAC (1) being Annexure P/17 dated 17.04.2021. 10.5. As an interim measure, staying the effect and operation of the assessment order being Annexure P/15 dated 17.04.2021 and directing the respondents to not take any coercive measures for recovery of tax demands till the disposal of this petition. and also staying the effect and operation of the notice initiating penalty proceedings under S. 271 AAC (1) being Annexure P/17 dated 17.04.2021. 10.6. Any other relief that this Hon'ble rt may deem fit.” 2. Learned counsel for the petitioner would submit that petitioner is a company engaged in the trading business of gold, silver bullion and also manufacturing & selling gold jewelleries, diamond and other precious stones. On 8.10.2018 petitioner company submitted its return under Section 139 (1) of the Act of 1961 for the assessment year 2018-19 declaring its total income of Rs.3,55,90,530/- with a 3 tax liability of Rs.1,17,71,410/-. Petitioner received notice dated 23.9.2019 issued under Section 143 (2) of the Act of 1961 regarding initiation of proceedings under Computer Aided Scrutiny Selection (CASS) raising certain issues. Petitioner thereafter received letter dated 15.10.2020 informing that its case will be completed under the Faceless Assessment Scheme, 2019 (for short ‘the Scheme’). Vide letter dated 17.12.2020 petitioner was asked to submit its response along with supporting documents on or before 1.1.2021. Petitioner submitted application dated 4.1.2021 seeking time to file reply to notice. Respondent Department issued detailed notice raising specific queries and called upon petitioner to submit its response on the same, to which petitioner filed response. Thereafter another notice was issued to petitioner seeking response on the points mentioned therein to which also petitioner responded. She submits that in the meantime, Section 144B of the Act of 1961 was inserted under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, which came into force w.e.f. 01.04.2021. Section 144B of the Act of 1961 provides detailed procedure to be followed by the Department for assessment under the Faceless Scheme. As per Section 144-B of the Act of 1961, the respondent Department is required to issue 4 draft assessment to the National Faceless Assessment Centre to provide an opportunity to assessee, in case any variation prejudicial to the interest of assessee is proposed, by serving draft assessment and notice calling upon assessee to show-cause as to why proposed variation should not be made. Petitioner was not served with any such show-cause notice, thereby not granted any opportunity of hearing. Respondent Department without considering response of petitioners had passed the order of assessment requiring the petitioner to pay amount of Rs.2,07,05,690/- and also notice intimating petitioners about initiation of proceedings for imposition of penalty under Section 271-AAC (1) of the Act of 1961. The order of assessment and consequent proceedings were drawn after coming into force of Section 144B of the Act of 1961. The proceedings drawn for assessment under Section 143 (3) is in violation of the specific provisions contained under Section 144B i.e. of following mandatory procedure before passing assessment order under Section 143 (3). She also contended that petitioners ought to have been given notice of proposed variations along with draft assessment order so that petitioner could have an opportunity to put forth its case before the authorities concerned. To alienate human interference between 5 tax payers and tax officers and to bring transparency during tax administration. The Scheme was further modified vide Notification No.60/2020 & 61/2020. It came into force with effect from 1.4.2021 by insertion of Section 144B and other provisions. Section 144B of the Act of 1961 provides for issuance of show- cause notice at the time of draft assessment or final draft assessment where there is proposal to make any variation which is prejudicial to the interest of an assessee. In support of her contention, she referred to specific provision under Section 144B (1) (xvi) (b) and (xxv) of the Act of 1961. She submits that as procedure prescribed for assessment under the Scheme has not been followed, consequence of such procedure is also provided under Section 144B (9) of the Act of 1961. If assessment is not made in accordance with procedure laid down under this Section, it shall be non-est. It is also argued that National Faceless Assessment Centre, Delhi has issued Letter bearing No. NaFAC/ Delhi / CIT-3 / 2021-22 / 340 / 148 dated 31.12.2021 to all the Chief Commissioner of Income Tax Department after analyzing procedural lapses during assessment proceedings of passing of an order without serving a draft assessment order / show-cause notice; passing of an order without 6 giving opportunity of personal hearing to assessee, etc. It was further directed to check upon such issues before approving final assessment order. In support of her contention she places reliance upon the order dated 14.1.2022 passed by Division Bench of Delhi High Court in WPC No.14528/2021 and CM Application No.45702/2021 (Bharat Aluminum Co. Ltd. Vs Union of India); order dated 31.5.2021 passed by Delhi High Court in WPC No.5587/2021 & CM Application No.17382/2021; order dated 5.10.2021 passed by Division Bench of High Court of Gujarat at Ahmedabad in R/Special Leave Application No.7662/2021 [Gandhi Realty (India) Pvt. Ltd. vs. Assistant/Joint/Deputy/Assistant Commissioner of Income Tax/ Income Tax Officer. 3. Learned counsel for respondent department would submit that assessment order passed by respondent is appealable under Section 246A of the Act of 1961 before the Commissioner of Income Tax (Appeals) (CIT) and thereafter further appeal is provided under Sections 254 & 260 A of the Act of 1961. He further submitted that petitioners have directly come to this Court against the order of assessment without availing efficacious alternative remedy available under the law. Hence writ petitions are liable to be dismissed. 7 4. In reply to objection with regard to maintainability of writ petition, learned counsel for petitioner submits that as there is non-compliance of the provisions contained in Section 144B of the Act of 1961 which itself provides that any proceeding initiated for assessment, which is not made in accordance with procedure laid down under Section 144B of the Act of 1961, shall be non-est. Hence writ petition is maintainable. 5. I have heard learned counsel for the parties and perused the documents available on record. 6. Main thrust of learned counsel for petitioner at the time of submission of his case on merits is that non- following of the procedure prescribed under Section 144B of the Act of 1961 will make the proceedings non-est. The Ministry of Law and Justice (Legislative Department), New Delhi issued Gazette Notification dated 30.3.2022 wherein sub-section (9) of Section 144B of the Act of 1961 has been omitted w.e.f. 1.4.2021. By virtue of amendment brought in by the Legislature, the ground raised before this Court is not available as said provision itself stood omitted from the statute book with retrospective effect. Petitioner is having efficacious alternative statutory remedy of filing appeal before the appellate authority who can consider and decide other issues raised in this writ 8 petition. 7. For the foregoing reasons, I am not inclined to entertain this writ petition as the petitioner is having efficacious alternate statutory remedy of appeal and it is accordingly dismissed. Petitioner may approach Appellate Authority under the Act of 1961 raising all grievances and grounds, as raised in this petition. If petitioner prefers an appeal within a period of thirty days from today, the Appellate Authority shall consider and decide the same on its own merits in accordance with law. Sd/- (Parth Prateem Sahu) Judge roshan/- "