UDHARV PROJECTS PRIVATE LIMITED,NEW DELHI V. INCOME TAX OFFICER, DELHI

ITA 2159/DEL/2024

AI Insights

Udharv Projects Pvt. Ltd. appealed against the order of the National Faceless Appeal Centre (NFAC), which had partially allowed their appeal against the assessment order passed by the Income Tax Officer under the Faceless Assessment Scheme, 2019. The primary contention was that the assessment did not conform to the procedural requirements of the Scheme, specifically the absence of a draft assessment order and the opportunity for the assessee to contest the proposed modifications. The ITAT, referencing judgments from the Delhi and Bombay High Courts, held that the failure to issue a draft assessment order and provide an opportunity to the assessee rendered the assessment void.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 474586 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 01-08-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 02-05-2024
• Other Referred Cases: Rmsi P. Ltd. Vs. National E-assessment Centre, Delhi, Chander Arjandas Manwani Vs. National Faceless Assessment Centre & ors.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONIKA DHAMI
• Assessee Lawyers: S.S. NAGAR; GAURAV SACHDEVA; SERVING A NOTICE
• Keywords: Set aside; Gift; Period of limitation; Principle of natural justice; Prejudicial to interest
• Section: 143(3); 119; 13; 139; 234B; 133A; 244A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘H’, NEW DELHI Before Dr. B. R. R. Kumar, Accountant Member, Sh. Sudhir Kumar, Judicial Member ITA No. 2159/Del/2024 : Asstt. Year: 2018-19 Udharv Projects Pvt. Ltd., H-56, Udyog Nagar, Main Rohtak Road, S.O Nangaloi, West Delhi, New Delhi-110041 Vs Income Tax Officer, Ward-27(1), New Delhi-110002 (APPELLANT) (RESPONDENT) PAN No. AABCU3574F Assessee by : Sh. S. S. Nagar, CA & Sh. Gaurav Sachdeva, CA Revenue by : Ms. Monika Dhami, CIT-DR Date of Hearing: 01.08.2024 Date of Pronouncement: 25.10.2024 ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeal has been filed by the assessee against the order of National Faceless Appeal Centre (NFAC), Delhi dated 14.03.2024. 2. Following grounds have been raised by the assessee: “1. That on the facts and in the circumstances of the case, the addition, imposition of tax and interest with reference thereto, the quantification of taxable income and the tax liability, has been grossly unjustified, erroneous and unsustainable and necessary direction be given to the Ld. CIT(A) to give appropriate relief in accordance with law. 2. That on the facts and in the circumstances of the case, the Ld. CIT(A) has grossly erred in not appreciating the fact that the Ld. AO has failed to make the assessment in conformity with faceless assessment scheme, 2019. ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 2 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) has grossly erred in confirming the addition made by the Ld. AO u/s 56(2)(x) of the Act. 4. That on the facts and in the circumstances of the case, appellant should be allowed consequential relief in relation to imposition of interest u/s 234A & 234B of the Act on favourable disposal of the appeal. 5. That on the facts and in the circumstances of the case, appellant should be allowed interest u/s 244A of the Act on the balance amount refundable on favourable disposal of the appeal.” 3. We proceed to deal with ground No. 2. 4. The assessee is a company was engaged in the business of real estate. The return of income was filed on 18-09-2018. The case of the assessee was selected for assessment u/s 143(3) of the Act. The AO has passed an impugned order u/s 143(3) r.w.s. 143 (3A) & (3B) of the Act dated 31-03-2021. Against the said order the appellant has filed appeal before the Ld. CIT(A). The Ld. CIT-(A) has party allowed the appeal of the appellant vide order dated 14.03.2024 5. Aggrieved by the same, the assessee is in appeal before the IТАТ. Heard the arguments of both the parties and perused the material available on record. 6. At the outset, it was argued that the Assessing Officer completed the assessment erroneously without following the due procedure in the case of the appellant u/s 143(3) r.w.s. 143 (3A) & (3B) of the Act vide order dated 31-03-2021 under E- assessment Scheme, 2019 (\"now Faceless Assessment Scheme\"). ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 3 7. On perusal of the clauses 2(xiv), 2(xv) and 2(xvi) of the aforesaid Scheme it is clear that the Assessing Officer after taking all relevant material on record ought to have, make in writing, a draft assessment order, provide details of the penalty proceedings to be initiated and provide an opportunity to the assessee in case of any variation prejudicial to the interest of the assessee is proposed. 8. However, it is a fact on record that the Assessing Officer has passed an impugned order u/s 143(3) r.w.s. 143 (3A) & (3B) of the Act dated 31-03-2021 without issuing a draft assessment order. The screenshot of the portal evidencing the said facts is enclosed in the paper book which has not been disputed by the Revenue. The provisions laid down clauses 2(xiv), 2(xv) and 2(xvi) of the Scheme have been completely disregarded by the Assessing Officer. Further, the Ld. CIT(A) in its order dated 14-03-2024, has disposed also off the said ground in the cursory manner. 9. The assessee has also submitted an affidavit which has been duly provided to the Revenue, the facts of which were not disputed nor proved contra. The affidavit filed by the assessee is as under: ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 4 ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 5 ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 6 ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 7 10. We have gone through the notices issued on the E-filing portal submitted by the assessee “view notices for e- proceedings” at page no. 19 of the paper book. 11. We have also gone through the Notification No. 60/2020 of the CBDT. The notification on the procedure to be followed by the Assessing Officer has been examined in detail. For the sake of ready reference, the same is reproduced as under: MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) Notification No. 60/2020-Income Tax New Delhi, the 13th August, 2020 S.O. 2745 (E). —In exercise of the powers conferred by sub-section (3A) of section 143 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following amendments in the E-assessment Scheme, 2019 published vide notification of the Government of India, Ministry of Finance (Department of Revenue), Central Board of Direct Taxes, in the Gazette of India, Extraordinary, vide number S.O 3264 (E) dated the 12th September, 2019, namely: — 1. In the said Scheme, — (1) in sub-paragraph (1) of paragraph 1, for the word “E-assessment”, the words “Faceless Assessment” shall be substituted; (2) in sub-paragraph (1) of paragraph 2, — (i) in clause (iii), after the words, brackets, and figures “under sub-section (3) of section 143”, the words and figures “or section 144” shall be inserted; (ii) after clause (xxiii), the following clause shall be inserted, namely: — “(xxiiia) “Rules” means the Income-tax Rules, 1962;” (3) in paragraph 4, — ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 8 (i) in clause (v) of sub-paragraph (1), after the words “forensic, information technology, valuation,”, the word “audit,” shall be inserted; and (ii) in sub-paragraph (3), the word “sub-paragraphs” shall be substituted by the word “clauses” and the word “paragraph” shall be substituted by the word “sub-paragraph”. (4) for paragraph 5, the following paragraph shall be substituted, namely,— “5. Procedure for assessment. — (1) The assessment under this Scheme shall be made as per the following procedure, namely:— (i) the National e-Assessment Centre shall serve a notice on the assessee under sub-section (2) of section 143, specifying the issues for selection of his case for assessment; (ii) the assessee may, within fifteen days from the date of receipt of notice referred to in clause (i), file his response to the National e-assessment Centre; (iii) where the assessee – (a) has furnished his return of income under section 139 or in response to a notice issued under subsection (1) of 142 or sub-section (1) of section 148; and a notice under sub-section (2) of section 143 has been issued by the Assessing Officer or the prescribed income-tax authority, as the case may be; or (b) has not furnished his return of income in response to a notice issued under sub-section (1) of section 142 by the Assessing Officer; or (c) has not furnished his return of income under sub-section (1) of section 148 and a notice under subsection (1) of section 142 has been issued by the Assessing Officer; the National e-Assessment Centre shall intimate the assessee that assessment in his case shall be completed under this Scheme; ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 9 (iv) the National e-assessment Centre shall assign the case selected for the purposes of e-assessment under this Scheme to a specific assessment unit in any one Regional e-assessment Centre through an automated allocation system; (v) where a case is assigned to the assessment unit, it may make a request to the National e-assessment Centre for (a) obtaining such further information, documents or evidence from the assessee or any other person, as it may specify; (b) conducting of certain enquiry or verification by verification unit; and (c) seeking technical assistance from the technical unit; (vi) where a request for obtaining further information, documents or evidence from the assessee or any other person has been made by the assessment unit, the National e-assessment Centre shall issue appropriate notice or requisition to the assessee or any other person for obtaining the information, documents or evidence requisitioned by the assessment unit; (vii) the assessee or any other person, as the case may be, shall file his response to the notice referred to in clause (vi), within the time specified therein or such time as may be extended on the basis of an application in this regard, to the National e-Assessment Centre; (viii) where a request for conducting of certain enquiry or verification by the verification unit has been made by the assessment unit, the request shall be assigned by the National e-assessment Centre to a verification unit in any one Regional e-assessment Centres through an automated allocation system; (ix) where a request for seeking technical assistance from the technical unit has been made by the assessment unit, the request shall be assigned by the National e-assessment Centre to a technical unit in any one Regional e-assessment Centres through an automated allocation system; ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 10 (x) the National e-assessment Centre shall send the report received from the verification unit or the technical unit, based on the request referred to in clause (viii) or (ix) to the concerned assessment unit; (xi) where the assessee fails to comply with the notice referred to in clause (vi) or notice issued under subsection (1) of section 142 or with a direction issued under sub-section (2A) of section 142, the National e- Assessment Centre shall serve upon such assessee a notice under section 144 giving him an opportunity to show-cause, on a date and time to be specified in the notice, why the assessment in his case should not be completed to the best of its judgment; (xii) the assessee shall, within the time specified in the notice referred to in clause (xi) or such time as may be extended on the basis of an application in this regard, file his response to the National e-Assessment Centre; (xiii) where the assessee fails to file response to the notice referred to in clause (xi) within the time specified in the notice or within the extended time, if any, the National e-Assessment Centre shall intimate such failure to the assessment unit; (xiv) the assessment unit shall, after taking into account all the relevant material available on the record make in writing, a draft assessment order or, in a case where intimation referred to in clause (xiii) is received from the National e-Assessment Centre, make in writing, a draft assessment order to the best of its judgment, either accepting the income, or sum payable by, or sum refundable to, the assessee as per his return or modifying the said income or sum, and send a copy of such order to the National e- assessment Centre; (xv) the assessment unit shall, while making draft assessment order, provide details of the penalty proceedings to be initiated therein, if any; (xvi) the National e-assessment Centre shall examine the draft assessment order in accordance with the risk management strategy specified by the ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 11 Board, including by way of an automated examination tool, whereupon it may decide to, — (a) finalise the assessment as per the draft assessment order and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee, alongwith the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment; or (b) provide an opportunity to the assessee, in case a modification is proposed, by serving a notice calling upon him to show cause as to why the assessment should not be completed as per the draft assessment order; or (c) assign the draft assessment order to a review unit in any one Regional e-assessment Centre, through an automated allocation system, for conducting review of such order; (xvii) the review unit shall conduct review of the draft assessment order, referred to it by the National e-assessment Centre whereupon it may decide to, — (a) concur with the draft assessment order and intimate the National e- assessment Centre about such concurrence; or (b) suggest such modifications, as it may deem fit, to the draft assessment order and send its suggestions to the National e-assessment Centre; (xviii) the National e-assessment Centre shall, upon receiving concurrence of the review unit, follow the procedure laid down in sub-clause (a) or sub- clause (b) of clause (xvi), as the case may be; (xix) the National e-assessment Centre shall, upon receiving suggestions for modifications from the review unit, assign the case to an assessment unit, other than the assessment unit which has made the draft assessment order, through an automated allocation system; ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 12 (xx) the assessment unit shall, after considering the modifications suggested by the review unit, send the final draft assessment order to the National e-assessment Centre; (xxi) The National e-assessment Centre shall, upon receiving final draft assessment order, follow the procedure laid down in sub- clause (a) or sub-clause (b) of clause (xvi), as the case may be; (xxii) the assessee may, in a case where show-cause notice under sub- clause (b) of clause (xvi) has been served upon him, furnish his response to the National e-assessment Centre on or before the date and time specified in the notice or within the extended time, if any; (xxiii) the National e-assessment Centre shall,- (a) in a case where no response to the show-cause notice is received, finalise the assessment as per the draft assessment order, as per the procedure laid down in sub- clause (a) of clause (xvi); or (b) in any other case, send the response received from the assessee to the assessment unit; (xxiv) the assessment unit shall, after taking into account the response furnished by the assessee, make a revised draft assessment order and send it to the National e-assessment Centre; (xxv) the National e-assessment Centre shall, upon receiving the revised draft assessment order,— (a) in case no modification prejudicial to the interest of the assessee is proposed with reference to the draft assessment order, finalise the assessment as per the procedure laid down in sub-clause (a) of clause (xvi); or (b) in case a modification prejudicial to the interest of the assessee is proposed with reference to the draft assessment order, provide an opportunity to the assessee, by serving a notice as per the procedure laid down in sub-clause (b) of clause (xvi); (c) the response furnished by the assessee shall be dealt with as per the procedure laid down in clauses (xxii), (xxiii), and (xxiv); ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 13 (xxvi) The National e-assessment Centre shall, after completion of assessment, transfer all the electronic records of the case to the Assessing Officer having jurisdiction over the said case for such action as may be required under the Act;” (2) Notwithstanding anything contained in sub-paragraph (1), the Principal Chief Commissioner or the Principal Director General, in charge of National e-assessment Centre, may at any stage of the assessment, if considered necessary, transfer the case to the Assessing Officer having jurisdiction over such case, with the prior approval of the Board.” (5) in paragraph 6, for sub-paragraph (5), the following sub-paragraph shall be substituted, namely: — “(5) The National e-assessment Centre shall levy the penalty as per the said draft order of penalty and serve a copy of the same along with demand notice on the assessee or any other person, as the case may be, and thereafter transfer electronic records of the penalty proceedings to the Assessing Officer having jurisdiction over the said case for such action as may be required under the Act.” (6) in paragraph 7, after the words “appeal against an assessment”, the words “order, or penalty order” shall be inserted. (7) for paragraphs 8 and 9, following paragraphs shall be substituted, namely: — “8. Exchange of communication exclusively by electronic mode.–– (1) For the purposes of this Scheme,- (a) all communications between the National e-assessment Centre and the assessee, or his authorised representative, or any other person shall be exchanged exclusively by electronic mode; and (b) all internal communications between the National e-assessment Centre, Regional e-assessment Centres and various units shall be exchanged exclusively by electronic mode; ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 14 (2) The provisions of sub-paragraph (1) shall not apply to the enquiry or verification conducted by the verification unit in the circumstances referred to in clause (via) of Paragraph 12. 9. Authentication of electronic record. — For the purposes of this Scheme, an electronic record shall be authenticated by –– (i) the National e- Assessment Centre by affixing its digital signature; and (ii) the assessee or any other person, by affixing his digital signature if he is required under the Rules to furnish his return of income under digital signature, and in any other case by affixing his digital signature or under electronic verification code; Explanation. – For the purpose of this paragraph, “electronic verification code” shall have the same meaning as referred to in rule 12 of the Rules.” (8) in paragraph (11), — (i) for sub-paragraphs (2) and (3), following sub-paragraphs shall be substituted, namely: — “(2) In a case where a modification is proposed in the draft assessment order, and an opportunity is provided to the assessee by serving a notice calling upon him to show cause as to why the assessment should not be completed as per the such draft assessment order, the assessee or his authorised representative, as the case may be, may request for personal hearing so as to make his oral submissions or present his case before the income-tax authority in any unit under this Scheme; (3) The Chief Commissioner or the Director General, in charge of the Regional e-assessment Centre, under which the concerned unit is set up, may approve the request for personal hearing referred to in sub-paragraph (2) if he is of the opinion that the request is covered by the circumstances referred to in clause (vib) of Paragraph 12; (3A) Where the request for personal hearing has been approved by the Chief Commissioner or the Director General, in charge of the Regional e- assessment Centre, such hearing shall be conducted exclusively through ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 15 video conferencing, including use of any telecommunication application software which supports video telephony, in accordance with the procedure laid down by the Board; (3B) Subject to the sub-paragraph (2) of paragraph (8), any examination or recording of the statement of the assessee or any other person (other than statement recorded in the course of survey under section 133A of the Act) shall be conducted by an income-tax authority in any unit under this Scheme, exclusively through video conferencing, including use of any telecommunication application software which supports video telephony in accordance with the procedure laid down by the Board.” (9) in paragraph (12), –– (i) numbering of sub-paragraph (1) shall be omitted; and (ii) in the paragraph so as renumbered, – A. after the words “in charge of the National e-assessment Centre shall”, the words “, with the approval of the Board,” shall be inserted; and B. after clause (vi), following clauses shall be inserted, namely:– “(via) circumstances in which provisions of sub-paragraph (1) of paragraph 8 shall not apply; (vib) circumstances in which personal hearing referred to in sub-paragraph (3) of paragraph (11) shall be approved;” (10) for the word “assesse”, wherever they occur the word “assessee” shall be substituted. 2. This notification shall come into force with effect from the date of its publication in the Official Gazette. [Notification No. 60 /2020/F.No. 370149/154/2019-TPL] ANKUR GOYAL, Under Secy. ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 16 12. We have also examined the order of the CBDT passed u/s 119 of the Income Tax Act, 1961. The same is as under: F No. 187/3/2020-ITA-I Government of India Ministry of Finance Department of Revenue (Central Board of Direct Taxes) North Block, New Delhi-110001. Dated the 13 th August, 2020 ORDER Subject: Order under section 119 of the Income-tax Act, 1961 With the launch of various e governance initiatives, Income-tax Department is moving toward total computerization of its work. This has led to a significant improvement in delivery of services and has also brought greater transparency in the functioning of the tax- administration. 2. In order to ensure that all the assessment orders are passed through the Faceless Assessment Scheme, 2019, the Board in exercise of powers under section 119 of the Income-tax Act, 1961 hereby directs that all the assessment orders shall hereafter be passed by National e- Assessment Centre through the Faceless Assessment Scheme, 2019, except as provided hereunder:- i) Assessment orders in cases assigned to Central Charges. ii) Assessment orders in cases assigned to International Tax Charges 3. Any assessment order which is not in conformity with Para-2 above, shall be treated as non-est and shall be deemed to have never been passed ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 17 4. This order shall come into force with effect from the 13th day of August, 2020 5. The Hindi version of this order shall follow. Sd/- (Prajna Paramita) Director to the Government of India 13. A concurrent reading of notification dated 13.08.2020 and order of the CBDT passed u/s 119 of the Income Tax Act, 1961 dated 13.08.2020 laid down that a draft Assessment Order has to be passed and to be given to the assessee to provide an opportunity and also that if such procedure as laid down in the notification dated 13.08.2020 is not followed or not in conformity with the procedure laid down, the Assessment Order shall be treated as non-est and shall be deemed to have never been passed. 14. On this issue, we are guided by the judgment of the Hon'ble jurisdictional High Court of Delhi in the case of Rmsi P. Ltd. Vs. National E-assessment Centre, Delhi and the Hon'ble Bombay High Court in the case of Chander Arjandas Manwani Vs. National Faceless Assessment Centre & ors. (WP No. 3195 of 2021). 15. The Hon’ble Delhi High Court in the case of Rmsi P. Ltd. Vs. The National Faceless Assessment in W.P.(C) No. 6482 of 2021 vide order dated 14.07.2021 held as under: ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 18 “Section 144B, read with section 143, of the Income-tax Act, 1961 Faceless Assessment (Notice) - Whether before passing assessment order, it is mandatory for National E- Assessment Centre to provide an opportunity to assessee, by serving a notice calling upon him to show cause as to why variation proposed in Draft Assessment Order, which is prejudicial to interest of assessee, be not made - Held, yes - Whether absence of such notice would clearly be a violation of principles of natural justice leading to assessment order passed being declared void - Held, yes - Whether further, absence of a provision akin to section 144B(9) in E-Assessment Scheme, 2019 would not make any difference to such legal outcome inasmuch as violation of principles of natural justice renders such decision void - Held, yes Whether therefore, impugned assessment order had been passed in case of assessee under E-Assessment scheme, 2019, without issuance of a draft assessment order followed by a revised draft assessment order and thereby not complying with procedure laid down in Scheme and in violation of principles of natural justice was to be set aside- Held, yes [Paras 9, 10, 11 and 14] [In favour of assessee] 1. This petition has been filed by the petitioner challenging the Assessment Order dated 31.03.2021 passed under Section 143(3) read with Sections 143(3A) and 143(3B) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) against the petitioner under the E-Assessment Scheme, 2019 for the Assessment Year 2017-18. 2. The learned counsel for the petitioner submits that the Impugned Assessment Order is liable to be set aside inasmuch as it is not preceded by the issuance of a ‘Draft Assessment Order’ followed by a ‘Revised Draft Assessment Order’. 3. Issue notice. Notice is accepted by Mr. Puneet Rai, learned counsel for the respondent. He raises a preliminary objection on the ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 19 maintainability of the present petition, contending that the petitioner has already challenged the impugned assessment order by way of an appeal. He further submits that in absence of a provision akin to Section 144B (9) of the Act, issuance of a Draft Assessment Order cannot be held to be mandatory and failure to issue such order cannot be treated as fatal. 4. As far as the maintainability of the present petition is concerned, the learned counsel for the petitioner submits that the said appeal was filed only to ensure that the period of limitation is not crossed. He submits that as the impugned order has been passed without jurisdiction, the remedy of a writ petition would be available to the petitioner. In support of his submission, he places reliance on the judgment dated 04.06.2021 passed by the predecessor Bench of this Court in Gurgaon Realtech Limited vs. National Faceless Assessment Centre Delhi (earlier National E-Assessment Centre (2021) 127 taxmann.com 726. 5. He further submits that absence of a provision akin to Section 144B (9) of the Act from the Scheme would not be of much relevance in as much as the Scheme has been framed under Section 143(3A) of the Act and is mandatory to be followed by the Authorities. 6. We have considered the submissions made by the learned counsels for the parties. 7. It is not denied by the learned counsel for the respondent that the Impugned Assessment Order was not preceded by the Draft Assessment Order. 8. Clause 5 (1) (viii) and (x) of the E-Assessment Scheme, 2019 are reproduced hereinunder: ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 20 “5. Procedure for assessment.- (1) The assessment under this Scheme shall be made as per the following procedure, namely:- ***** (viii) the assessment unit shall, after taking into account all the relevant material available on the record, make in writing, a draft assessment order either accepting the returned income of the assessee or modifying the returned income of the assesse, as the case may be, and send a copy of such order to the National e- assessment Centre; ******* (x) the National e-assessment Centre shall examine the draft assessment order in accordance with the risk management strategy specified by the Board, including by way of an automated examination tool, whereupon it may decide to- (a) finalise the assessment as per the draft assessment order and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee, alongwith the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment; or (b) provide an opportunity to the assessee, in case a modification is proposed, by serving a notice calling upon him to show cause as to why the assessment should not be completed as per the draft assessment order; or (c) assign the draft assessment order to a review unit in any one Regional e-assessment Centre, through an automated allocation system, for conducting review of such order;” ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 21 9. A reading of the above provision would clearly show that it is mandatory for the National E-Assessment Centre to provide an opportunity to the assessee, by serving a notice calling upon him to show cause as to why the variation proposed in the Draft Assessment Order, which is prejudicial to the interest of the assessee, be not made. 10. Absence of such notice would clearly be a violation of the principles of natural justice leading to the Assessment Order passed being declared void. 11. Absence of a provision akin to Section 144B (9) in the E- Assessment Scheme, 2019 would not make any difference to such legal outcome in as much as violation of principles of natural justice renders such decision void. Even otherwise, the Income Tax authorities have to remain bound by the Statutory Scheme of assessment. 12. As far as the objection on the maintainability of the present petition on account of the petitioner having already availed of the remedy of the appeal, the same is also liable to be rejected. In Gurgaon Realtech Limited (supra), this Court had negatived a similar objection observing as under: “9.1 To our minds, if the challenge to the assessment order is made on the ground that it was passed without jurisdiction, then, notwithstanding the fact that an appeal was filed, albeit, only to ensure that the limitation is not crossed, is not an impediment in proceeding ahead with the matter…. xxxx ” 13. In the present case as well, the impugned Assessment Order ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 22 having been passed without complying with the procedure laid down in the Scheme and in violation of principles of natural justice, the writ petition would be maintainable. 14. Consequently, the Impugned Assessment Order dated 31.03.2021 passed under Section 143(3) read with Sections 143(3A) and 143(3B) of the Act is set aside. However, the respondent/Revenue is given liberty to pass a fresh Assessment Order in accordance with law. The petitioner shall also have liberty to challenge any action of the respondent/Revenue in accordance with law, in the event that it is aggrieved by the same. 15. Accordingly, the present Writ Petition and the pending application stand disposed of. 16. The order be uploaded on the website forthwith. Copy of the order be also forwarded to the learned counsel through e-mail.” 16. The Hon’ble Bomay High Court in the case of Chander Arjandas Manwani vs The National Faceless Assessment in Writ Petition No. 3195 of 2021 vide order dated 21.09.2021 held as under: “2. We can fast forward to January, 2021. Petitioner received a notice dated 18th January, 2021 calling upon to show cause as to why the assessment should not be completed as per the draft assessment order. Paragraph 2 of the notice reads as under : \"2. A draft assessment order proposing to modify your returned income and/or sum payable is reproduced as under:- From the perusal of the reply dt. 28/12/2020, the following fndings have come out which as below: ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 23 1. In response of question \"Reasons for showing low income in comparison to TCS receipts\", you have submitted that \"Now a days market is buyer markets, there is competition in market in every kind of product, in this case also market is very competitive, reason for low income is due to competition. But, failed to substantiate with documentary evidences. Please substantiate with documentary evidences. If you fail, why not adverse view may be taken and why not net profit may be estimated 8 of total receipt. 2. In response of substantial increase in capital in year, you have submitted the gift deeds of donors regarding Rs.89,00,000/-. In this respect, you are requested to please submit the source of income alongwith business activities, copy of ITR, P&L and Balance Sheet and copy of Bank Statements of the donors and prove the genuineness of donors and also submit the documentary evidences of proceeds received on partition of Arjandas Manwani (HUF) amounting to Rs.1,09,73,174/-. If you fail, please show cause as to why not abovementioned amount i.e. Rs.89,00,000/- and Rs.1,09,73,174/- may be added in your total income. You are hereby given an opportunity to show cause why the assessment should not be completed as per the draft assessment order.\" (emphasis supplied) 3. We find that it is not a draft assessment order but a notice calling upon petitioner to provide further details and documentary evidences. In paragraph 1 it is stated \"--------------- Please substantiate with documentary evidences. If you fail, why not adverse view may be taken and why not net profit may be estimated of total receipt.\" In paragraph 2 it is stated \" --------------- In this respect, you are requested to please submit the source of income alongwith business activities, copy of ITR, P&L and Balance Sheet ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 24 and copy of Bank Statements -----------.\" Petitioner was called upon to submit his response by 23:59 hours of 22nd January, 2021 and also advised to specifically state whether a personal hearing was required. 4. Petitioner fled a reply on 26th January, 2021 stating that petitioner's Tax Consultant had undergone Prostate Surgery and that he has appointed another Chartered Accountant and sought time. Petitioner also stated that a personal hearing is required to be granted. This was followed by another reply dated 27th January, 2021 whereby petitioner complied with one of the requirements of the notice dated 18th January, 2021. Petitioner once again requested a personal hearing. Thereafter, petitioner fled a third response dated 1st February, 2021 whereby remaining requirements of the notice dated 18th January, 2021 were provided. 5. On 1st February, 2021, petitioner received a fresh notice calling upon to show cause as to why assessment should not be completed as per the draft assessment order. In our view, this also was not a draft assessment order because petitioner is seeking further documentary evidences. Even in this show cause notice it is stated \"a draft assessment order proposing to modify your returned income and/or sum payable is reproduced as under : But it goes on to say \"From the perusal of the reply dt. 26/01/2021, the following fndings have come out which as below: 1. In response of question \"Reasons for showing low income in comparison to TCS receipts\", you have submitted that \"Now a days market is buyer markets, there is competition in market in every kind of product, in this case also market is very competitive, reason for low income is due to competition. And reply dt. 26.01.2021 you requested for adjournment. But, failed to substantiate with documentary ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 25 evidences. Again opportunity is being given for your compliance.\" (emphasis supplied) 6. Therefore, in our view, both these notices dated 18 th January, 2021 and 1st February, 2021 have been issued without clear application of mind. Petitioner responded to this notice dated 1st February, 2021 by his reply dated 5th February, 2021. Thereafter, assessment order dated 2n d March, 2021 has been passed which is impugned in this Petition. According to petitioner, this assessment order has been passed in breach of the provisions of the Faceless Assessment Scheme, 2019 that was introduced by way of Notification No. 60/2020 dated 13th August, 2020 in as much as petitioner's request for personal hearing has been ignored and mandatory draft assessment order has not been issued to petitioner. 7. On the question of issue of non granting of personal hearing, the notices dated 18th January, 2021 and 1st February, 2021 both provided that petitioner may seek personal hearing so as to make oral submissions through video conferencing. Petitioner in his reply dated 26t h January, 2021, 27th January, 2021 and 5th February, 2021 has sought personal hearing. Notwithstanding this request respondent has neither granted personal hearing nor stated in the assessment order why the personal hearing was not granted. On this ground alone, in our view, the assessment order dated 2nd March, 2021 requires to be set aside. 8. As regards non furnishing of draft assessment order, in the assessment order it is stated \"a show cause notice has been issued on 18/01/2021 for compliance on 22/01/2021 and again a final show cause notice with draft assessment order has been issued on 01/02/2021 for compliance on 05/02/2021. In response, the assessee has submitted the submission which has been perused\". Though in the assessment order it is stated that draft assessment ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 26 order was provided with show cause notice dated 1st February, 2021, from the affidavit in reply it appears that the draft assessment order was generated in ITBA system only on 25th February, 2021. 9. In our view, as noted earlier no draft assessment order has been issued at all let alone on 1st February, 2021. The notice dated 1st February, 2021, as stated earlier, is seeking further documentary evidences and those evidences sought are for the first time. When respondent is seeking documentary evidences, that communication by no stretch of imagination can be even referred to as a draft assessment order. 10. The Faceless Assessment Scheme, 2019 as per the circular dated 13th August, 2020, provides that where a modification is proposed, the National e-Assessment Centre shall provide an opportunity to the assessee by serving a notice calling upon him to show cause as to why the assessment should not be completed as per draft assessment order. This has not been complied with. This is one more reason, in our view, for interfering. 11. We have to note that CBDT in its order dated 13t h August, 2020 under Section 119 of the Act has ordered as under : \"2. In order to ensure that all the assessment orders were passed through the Faceless Assessment Scheme, 2019, the Board in exercise of powers under section 119 of the Income-tax Act, 1961 here by directs that all the assessment orders shall hereafter be passed by National e-Assessment Centre through the Faceless Assessment Scheme, 2019, except as provided hereunder :- i) Assessment orders in cases assigned to Central Charges. ii) Assessment orders in cases assigned to International Tax Charges. ITA No. 2159/Del/2024 Udharv Projects Pvt. Ltd. 27 3. Any assessment order which is not in conformity with Para-2 above, shall be treated as non-est and shall be deemed to have never been passed.\" Therefore, any assessment order which is not in conformity with Para-2 above, shall be treated as non-est and shall be deemed to have never been passed. 12. In the circumstances, the assessment order not having been passed in conformity with the requirements of the Faceless Assessment Scheme, 2019 has to be treated as non-est and shall be deemed to have never been passed. 13. Therefore, the order impugned dated 2nd March, 2021, is hereby quashed and set aside. The consequential notice of demand and notice of penalty are also set aside.” 17. The Revenue could not bring to our notice any judgment contrary to the judgments mentioned above. In the absence of any change in the factual matrix and the legal proposition, the Assessment Order passed which is not in conformity with the procedure prescribed under the Faceless Scheme is hereby quashed. 18. In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 25/10/2024. Sd/- Sd/- (Sudhir Kumar) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 25/10/2024 *Subodh Kumar, Sr. PS* "