Darshan Enterprise Through v. Additional/ Joint/ Deputy/ Assistant Commissioner Of Income Tax/Income Tax Officer

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 13556 of 2021 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE J.B.PARDIWALA Sd/- andHONOURABLE MS. JUSTICE NISHA M. THAKORE HONOURABLE MS. JUSTICE NISHA M. THAKORESd/-==========================================================1Whether Reporters of Local Papers may be allowedYesto see the judgment ?2To be referred to the Reporter or not ?Yes3Whether their Lordships wish to see the fair copyNoof the judgment ?4Whether this case involves a substantial questionNoof law as to the interpretation of the Constitutionof India or any order made thereunder ? ==========================================================DARSHAN ENTERPRISE THROUGH PARTNER ASHVINBHAIKARSHANBHAI ZALAVADIYA VersusADDITIONAL/ JOINT/ DEPUTY/ ASSISTANT COMMISSIONER OF INCOMETAX/INCOME TAX OFFICER ==========================================================Appearance: MR MANISH J SHAH(1320) for the Petitioner(s) No. 1MRS KALPANAK RAVAL(1046) for the Respondent(s) No. 1,2========================================================== CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALAand HONOURABLE MS. JUSTICE NISHA M. THAKORE Date : 03/01/2022 ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1.By this writ application under Article 226 of theConstitution of India, the writ applicant, a registeredpartnership firm through one of its partners, has prayedfor the following reliefs; “A)This Hon’ble Court be pleased to call for therecords of the proceedings, look into them and bepleased to issue a writ of certiorari or any otherappropriate writ, order or direction quashing theassessment order passed by Respondent No.1u/s.143(3) r.w.s. 144B dated 19.04.20121 atAnnexure-F and demand notice u/s.156 of even dateat Annexure-G. B)this Hon’ble Court be pleased to call for therecords of the proceedings, look into them and bepleased to issue a writ of mandamus or any otherappropriate writ, order or direction directing theRespondents to grant complete stay of demandarising out of assessment order passed u/s.143(3)r.w.s. 144B dated 19.04.2021 at Annexure-F. C)Pending the hearing and final disposal of thisapplication, this Hon’ble Court be pleased to stayoperation and implementation of the assessmentorder passed u/s.143(3) r.w.s. 144B dated19.04.2021 at Annexure-F and further stay therecovery of demand in pursuance of the noticeissued u/s.156 at Annexure-G. D)This Hon’ble Court be pleased to grant anyfurther or other relief as this Hon’ble Court deemsjust and proper in the interest of justice, and E)This Hon’ble Court be pleased to allow thisapplication with costs against the respondents.” 2.The facts, giving rise to this litigation, may be summarized as under; 2.1The writ applicant came to be incorporated as apartnership firm on 16.12.2017. The partnership firm isengaged in the business of real estate development. It isthe case of the firm that it has ten partners. For the yearunder consideration, as the firm was constituted on16.12.2017 and had no business activity by that period oftime, it filed its return of income on 02.06.2018 at Rs.Nil. 2.2The case of the writ applicant was selected forscrutiny assessment and, accordingly, notice was issuedunder Section 143(2) of the Act dated 22.09.2019. Themain ground on which the return was selected for scrutinyas communicated is “share capital/other capital”. For thepurpose of carrying out assessment, notices under Section142(1) of the Act were issued calling upon the writapplicant to furnish the necessary details therein. It is notin dispute that pursuant to such notices, the necessaryinformation was furnished through various lettersaddressed by the C.A./Authorized Representative of thewrit applicant. 2.2The case of the writ applicant was selected forscrutiny assessment and, accordingly, notice was issuedunder Section 143(2) of the Act dated 22.09.2019. Themain ground on which the return was selected for scrutinyas communicated is “share capital/other capital”. For thepurpose of carrying out assessment, notices under Section142(1) of the Act were issued calling upon the writapplicant to furnish the necessary details therein. It is notin dispute that pursuant to such notices, the necessaryinformation was furnished through various lettersaddressed by the C.A./Authorized Representative of thewrit applicant. 2.3It appears that specific information with regard to theintroduction of capital by each of the partners in the firmand the source thereof was asked for from the writapplicant. 2.4The necessary information with regard to theintroduction of capital by each of the partners wasfurnished by way of reply dated 20.02.2021 running intoalmost seventeen pages. 2.5It is the case of the writ applicant that although allthe requisite information, as called for, was furnished, yetthe respondent No.1 herein without verifying such details,thought fit to issue a show-cause notice cum draftassessment order dated 31.03.2021 Annexure-D callingupon the writ applicant to show-cause as to why anamount of Rs.2,71,75,000/- (Rupees Two Crore SeventyOne Lakh Seventy Five Thousand Only) be not added tothe returned income of the firm on the premise that thecapital contribution by the partners remains unexplained. 2.6We take notice of the detailed objections lodged bythe writ applicant dated 02.04.2021 against the draftassessment order for scrutiny assessment proceedings forthe year in question. The same is at page-73 of the paper-book, Annexure-E. 2.7Ultimately, the final impugned assessment ordercame to be passed dated 19.04.2021 under Section143(3) read with Section 144B of the Act. We quote fewrelevant paragraphs from the impugned order ofassessment; “4.5 Thus, the assessee has failed to justify thecredit entries appearing in its books by not provingthe creditworthiness of the parties from whom thecapital shown to be received/taken and genuinenessof transaction made with them. In the case of thepartners, the income earned by parties is notsufficient so as to introduce the same in the capitalof the firm. Therefore, the assessee has shown thatthe partners have taken loans from some otherparties to introduce the capital in the firm which isnot backed by supporting evidences. Therefore, asrequired the assessee has not prove the onus of thecreditworthiness of the partners in introducing thecapital in the assessee firm and also the genuinenessand creditworthiness of the other parties from whomfunds have been received from the partners. 4.6In connection with the same for clearunderstanding, the provisions of Section 68 of the I.T.Act are reproduced as under; “Section 68; Where any sum is found credited inthe books of an assessee maintained for anyprevious year, and the assessee offers noexplanation about the nature and sourcethereof or the explanation offered by him, isnot, in the opinion of the (Assessing Officer,satisfactory, the sum so credited may becharged to Income Tax as the income of theassessee of that previous year.’ 4.7From the plain reading of the same, it is seenthat the onus is on the assessee to clearly establishthe genuineness, nature and sources of thetransaction,toprovetheidentityandcreditworthiness of the lenders from whom fundsreceived. The initial catchphrase of the section is“where any sum is found credited in the books ofaccount of the assessee” meaning thereby thatSection 68 is attracted where an entry relating to asum is found to have been credited in the books ofthe assessee, which thus implies existence of books and recording of a sum which the A.O. considers asdoubtful. 4.7From the plain reading of the same, it is seenthat the onus is on the assessee to clearly establishthe genuineness, nature and sources of thetransaction,toprovetheidentityandcreditworthiness of the lenders from whom fundsreceived. The initial catchphrase of the section is“where any sum is found credited in the books ofaccount of the assessee” meaning thereby thatSection 68 is attracted where an entry relating to asum is found to have been credited in the books ofthe assessee, which thus implies existence of books and recording of a sum which the A.O. considers asdoubtful. 4.8The question is what is the true nature andscope of Section 68 of the Act? When and in whatcircumstances Section 68 of the Act would come intoplay? A bare reading of section 68 suggests thatthere has to be credit of amounts in the booksmaintained by the assessee that such credit has tobe of a sum during the previous year, and that theassessee offer no explanation about the nature andsource of such credit found in the books of theexplanation offered by the assessee in the opinion ofthe A.O is not satisfactory. It is only then the sum socredited may be charged to income-tax as theincome of the assessee of that previous year. Theexpression ‘the assessee offer no explanation meanswhere the assessee offer no proper, reasonable andacceptable explanation as regards the sums foundcredited in the books maintained by the assessee. 4.9Such opinion found itself constitutes as primafacie evidence against the assessee, viz. the receiptof money, and if the assessee fails to rebut the saidevidence, the same can be used against theassessee by holding that it was a receipt of anincome nature. 4.10 In view of the above facts and discussion, it isvery much clear that assessee could not prove thecreditworthiness of the partners of the firm whohave introduced huge capital into the firm and alsothe identity, genuineness and creditworthiness of theother parties from whom funds have been receivedby the partners for introduction in the firm as capital.Thus, the relevant documentary evidences will notcome to the rescue of the assessee as the assesseehas failed to prove the creditworthiness of theparties from whom capital has been introduced andgenuineness, nature and source of the transactionsduring the year of receipt itself. Hence, capitalintroduced by the partners whose creditworthiness has not been proved and the identity, genuinenessand creditworthiness of the other parties from whomthe partners have shown to have received funds arealso not proved are calculated as under; 4.11 The amount of Rs.2,71,75,000/- is treated asunexplained cash credit in the books of the assesseefirm and brought to tax under Section 68 r.w.s115BBE of the Act being unexplained cash credits.Penalty proceedings u/s. 271AAC of the I.T. Act 1961is initiated separately. 5.1Subject to the above, the income of theassessee is determined as under; has not been proved and the identity, genuinenessand creditworthiness of the other parties from whomthe partners have shown to have received funds arealso not proved are calculated as under; 4.11 The amount of Rs.2,71,75,000/- is treated asunexplained cash credit in the books of the assesseefirm and brought to tax under Section 68 r.w.s115BBE of the Act being unexplained cash credits.Penalty proceedings u/s. 271AAC of the I.T. Act 1961is initiated separately. 5.1Subject to the above, the income of theassessee is determined as under; 2.8Thus, it appears from the aforesaid that theAssessing Officer took the view that the writ applicantfirm, as an assessee, had failed to justify the credit entriesappearing in its books of account by not proving thecreditworthiness of the parties from whom the capital isshown to have been received. According to the AssessingOfficer, although the partners have confirmed as regardsthe bringing the facts in the capital, yet, the AssessingOfficer was not convinced with such transactions becauseof the fact that the partners had obtained loans from theother parties. To put it more succinctly, the AssessingOfficer rejected the argument canvassed on behalf of theassessee as regards Section 68 of the Act on the groundthat the assessee had not been able to prove thecreditworthiness of the partners of the firm whointroduced huge capital in the firm and also the identity,genuineness and creditworthiness of the other partiesfrom whom funds had been received by the partners forbeing introduced in the firm as capital. 2.9Being dissatisfied with the aforesaid impugned orderpassed by the Assessing Officer, the writ applicant is herebefore this Court with the present writ application. 3.Mr. Manish J. Shah, the learned counsel appearing forthe writ applicant vehemently submitted that theimpugned assessment order is erroneous and in absolute violation of the principles of natural justice. Mr. Shah has avery short submission to canvass. According to Mr.Shah, alaw does not expect the assessee to explain the source ofa source. Mr. Shah would submit that when his client wascalled upon to explain the entries in the books of accountsof the firm, the firm furnished every bit of informationpointing out that it is the partners of the firm whointroduced the requisite amount in the capital of the firm.According to Mr. Shah, the matter should have stopped atthat stage. There could not have been any further inquirywith the firm. If the Assessing Officer had any doubtswith regard to the genuineness of the entire transaction, itcould have questioned the individual partners and not thefirm. This, according to Mr. Shah, would be in tune withSection 68 of the Act. 4.The second submission of Mr. Shah is that theimpugned assessment order is an exact reproduction ofthe draft assessment order. It fails to consider any of thedetails/information furnished by the writ applicant withrespect to the specific queries raised by the InvestigatingOfficer. Mr. Shah would submit that it is just a mechanicalexercise undertaken by the Assessing Officer and thesame would frustrate the very object with which Section144B came to be introduced in the Act with effect from01.04.2021. Mr. Shah laid much emphasis on the sub-clause (9) to Section 144B which starts with a non-obstante clause. Sub-section (9) to Section 144B provides that notwithstanding anything contained in anyother provision of the Act, the assessment made undersub-section (3) of Section 143 or under Section 144 in thecases referred to in sub-section (2) would be treated asnon-est if such assessment is found to be not inaccordance with the procedure laid down under Section144B of the Act. 5.Mr. Shah, in support of his aforesaid submissions, hasplaced strong reliance on one recent pronouncement ofthe Bombay High Court in the case of Mantra IndustriesLtd. vs. National Faceless Assessment Centre (NFAC provides that notwithstanding anything contained in anyother provision of the Act, the assessment made undersub-section (3) of Section 143 or under Section 144 in thecases referred to in sub-section (2) would be treated asnon-est if such assessment is found to be not inaccordance with the procedure laid down under Section144B of the Act. 5.Mr. Shah, in support of his aforesaid submissions, hasplaced strong reliance on one recent pronouncement ofthe Bombay High Court in the case of Mantra IndustriesLtd. vs. National Faceless Assessment Centre (NFAC or NeAC), reported in (2021) 131 taxmann.com 165(Bombay), wherein the Bombay High Court thought fit toset aside the impugned assessment order therein as thesame was found to be in breach of sub-section (9) ofSection 144B and left it for the Assessing Officer to takeappropriate steps as he may be advised in accordancewith law. Mr. Shah also placed reliance on one anotherorder passed by the Bombay High Court in the case ofMilestone Brandcom Private Limited vs. NationalFaceless Assessment Centre, New Delhi & Anr., WritPetition (L) No.28212 of 2021, decided on 14.12.2021,wherein also the order of assessment was quashed andthe matter was remanded for de novo consideration. 6.Over and above the aforenoted two orders passed bythe Bombay High Court, Mr. Shah has also placed reliance on the following decisions; 7.Mr. Shah, in particular, has placed strong reliance onthe judgment of this High Court in the case of MaliniConstruction Company (supra) to fortify his submissionthat the present matter needs to be remitted for de novoconsideration as the impugned order is not sustainable inview of Section 144B(9) of the Act. In other words, MaliniConstruction Company (supra) has been relied upon insupport of the submission that when the impugnedassessment order is bereft of reasons, then the samecould be said to be passed in gross violation of theprinciples of natural justice and the alternative remedy offiling an appeal under Section 246 of the Act before the Commissioner would not be a bar in entertaining the writapplication. 8.In such circumstances, referred to above, Mr. Shahprays that there being merit in this writ application, thesame be allowed and the reliefs as prayed for be granted. 9.On the other hand, this writ application has beenvehemently opposed by Ms. Kalpana Raval, the learnedsenior standing counsel appearing for the Revenue. Ms.Raval vehemently submitted that no error, not to speak ofany error of law, could be said to have been committed bythe Assessing Officer in passing the impugned assessmentorder. She would submit that even if there is violation ofthe principles of natural justice, or the order is withoutjurisdiction, the Writ Court may decline to entertain thewrit application if there is an alternative remedy in theform of a statutory appeal. According to Ms. Raval, thedecision of the Supreme Court in the case of Baburamvs. Zila Parishad, AIR 1969 SC 556 makes such positionof law abundantly clear. Ms. Raval would submit that inTitaghur Paper Mills Co. Ltd. vs. State of Orissa, AIR1983 SC 603, the appellant therein had pleaded that therewas violation of principles of natural justice and theimpugned order was without jurisdiction, yet the SupremeCourt held that the writ applicant should avail hisalternative remedy of appeal. Thus, according to Ms.Raval, it is well settled that when an alternative andequally efficacious remedy is open to the litigant, he should be required to pursue that remedy and not invokea special/equitable jurisdiction of the High Court to issue aprerogative writ. The second contention canvassed by Ms.Raval is that it is wrong to assert that the impugnedassessment order is an exact reproduction of the draftassessment order without considering the stance of thewrit applicant. Ms. Raval would submit that the AssessingOfficer made himself very clear that he is not convincedwith the genuineness of the entries in the ledger accountof the firm. She would submit that although the firmmight have said that it received a particular amount fromindividual partners, yet that by itself, would not besufficient to bring the case within the ambit of Section 68of the Act. The third and the last submission of Ms. Ravalis that all the aspects which have been highlighted by thelearned counsel appearing for the writ applicant could belooked into by the Commissioner of Appeals and, in suchcircumstances, this writ application may not beentertained and the same be rejected. ANALYSIS 10.Having heard the learned counsel appearing for theparties and having gone through the materials on record,the only question that falls for our consideration iswhether the present writ application should beentertained?. 11.Before adverting to the rival submissions canvassed on either side, we must look into the provisions of Section144B of the Act. Section 144B talks about facelessassessment. Section 144B came to be inserted w.e.f.01.04.2021. Section 144B starts with a non-obstanteclause. Section 144B(1) reads thus; 144B. (1) Notwithstanding anything to the contrarycontained in any other provisions of this Act, theassessment under sub-section (3) of section 143 orunder section 144, in the cases referred to in sub-section (2), shall be made in a faceless manner asper the following procedure, namely:— (i) the National Faceless Assessment Centre shallserve a notice on the assessee under sub-section (2)of section 143; (ii) the assessee may, within fifteen days from thedate of receipt of notice referred to in clause (i), filehis response to the National Faceless AssessmentCentre; (iii) where the assessee— (a) has furnished his return of income under section139 or in response to a notice issued under sub-section (1) of section 142 under or sub-section (1) ofsection 148, and a notice under sub-section (2) ofsection 143 has been issued by the Assessing Officeror the prescribed income-tax authority, as the casemay be; or (b) has not furnished his return of income inresponse to a notice issued under sub-section (1) ofsection 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 sub-section (1) of section 142 has been issued by the Assessing Officer, the National Faceless Assessment Centre shallintimate the assessee that assessment in his caseshall be completed in accordance with the procedurelaid down under this section; (iv) the National Faceless Assessment Centre shallassign the case selected for the purposes of facelessassessment under this section to a specificassessment unit in any one Regional FacelessAssessment Centre through an automated allocationsystem; (v) where a case is assigned to the assessment unit,it may make a request to the National FacelessAssessment Centre for— (a) obtaining such further information, documents orevidence from the assessee or any other person, asit may specify; (b) conducting of certain enquiry or verification byverification unit; and (c) seeking technical assistance from the technicalunit; (iv) the National Faceless Assessment Centre shallassign the case selected for the purposes of facelessassessment under this section to a specificassessment unit in any one Regional FacelessAssessment Centre through an automated allocationsystem; (v) where a case is assigned to the assessment unit,it may make a request to the National FacelessAssessment Centre for— (a) obtaining such further information, documents orevidence from the assessee or any other person, asit may specify; (b) conducting of certain enquiry or verification byverification unit; and (c) seeking technical assistance from the technicalunit; (vi) where a request for obtaining furtherinformation, documents or evidence from theassessee or any other person has been made by theassessment unit, the National Faceless AssessmentCentre shall issue appropriate notice or requisition tothe assessee or any other person for obtaining theinformation, documents or evidence requisitioned bythe assessment unit; (vii) the assessee or any other person, as the casemay be, shall file his response to the notice referredto in clause (vi), within the time specified therein orsuch time as may be extended on the basis of anapplication in this regard, to the National Faceless Assessment Centre; (viii) where a request for conducting of certainenquiry or verification by the verification unit hasbeen made by the assessment unit, the request shallbe assigned by the National Faceless AssessmentCentre to a verification unit in any one RegionalFaceless Assessment Centre through an automatedallocation system; (ix) where a request for seeking technical assistancefrom the technical unit has been made by theassessment unit, the request shall be assigned bythe National Faceless Assessment Centre to atechnical unit in any one Regional FacelessAssessment Centre through an automated allocationsystem; (x) the National Faceless Assessment Centre shallsend the report received from the verification unit orthe technical unit, based on the request referred toin clause (viii) or clause (ix) to the concernedassessment unit; (xi) where the assessee fails to comply with thenotice referred to in clause (vi) or notice issuedunder sub-section (1) of section 142 or with adirection issued under sub-section (2A) of section142, the National Faceless Assessment Centre shallserve upon such assessee a notice under section 144giving him an opportunity to show-cause, on a dateand time to be specified in the notice, why theassessment in his case should not be completed tothe best of its judgment; (xii) the assessee shall, within the time specified inthe notice referred to in clause (xi) or such time asmay be extended on the basis of an application inthis regard, file his response to the National FacelessAssessment Centre; (xiii) where the assessee fails to file response to the notice referred to in clause (xi) within the timespecified therein or within the extended time, if any,the National Faceless Assessment Centre shallintimate such failure to the assessment unit; (xiv) the assessment unit shall, after taking intoaccount all the relevant material available on therecord make in writing, a draft assessment order or,in a case where intimation referred to in clause (xiii)is received from the National Faceless AssessmentCentre, make in writing, a draft assessment order tothe best of its judgment, either accepting the incomeor sum payable by, or sum refundable to, theassessee as per his return or making variation to thesaid income or sum, and send a copy of such order tothe National Faceless Assessment Centre; (xv) the assessment unit shall, while making draftassessment order, provide details of the penaltyproceedings to be initiated therein, if any; (xiv) the assessment unit shall, after taking intoaccount all the relevant material available on therecord make in writing, a draft assessment order or,in a case where intimation referred to in clause (xiii)is received from the National Faceless AssessmentCentre, make in writing, a draft assessment order tothe best of its judgment, either accepting the incomeor sum payable by, or sum refundable to, theassessee as per his return or making variation to thesaid income or sum, and send a copy of such order tothe National Faceless Assessment Centre; (xv) the assessment unit shall, while making draftassessment order, provide details of the penaltyproceedings to be initiated therein, if any; (xvi) the National Faceless Assessment Centre shallexamine the draft assessment order in accordancewith the risk management strategy specified by theBoard, including by way of an automatedexamination tool, whereupon it may decide to— (a) finalise the assessment, in case no variation prejudicial to the interest of assessee is proposed, asper the draft assessment order and serve a copy ofsuch order and notice for initiating penaltyproceedings, if any, to the assessee, along with thedemand notice, specifying the sum payable by, orrefund of any amount due to, the assessee on thebasis of such assessment; or (b) provide an opportunity to the assessee, in caseany variation prejudicial to the interest of assessee isproposed, by serving a notice calling upon him toshow cause as to why the proposed variation shouldnot be made; or (c) assign the draft assessment order to a review unitin any one Regional Faceless Assessment Centre,through an automated allocation system, forconducting review of such order; (xvii) the review unit shall conduct review of the draftassessment order referred to it by the NationalFaceless Assessment Centre whereupon it maydecide to— (a) concur with the draft assessment order andintimate the National Faceless Assessment Centreabout such concurrence; or (b) suggest such variation, as it may deem fit, in thedraft assessment order and send its suggestions tothe National Faceless Assessment Centre; (xviii) the National Faceless Assessment Centre shall,upon receiving concurrence of the review unit, followthe procedure laid down in— (a) sub-clause (a) of clause (xvi); or (b) sub-clause (b) of clause (xvi); (xix) the National Faceless Assessment Centre shall,upon receiving suggestions for variation from thereview unit, assign the case to an assessment unit,other than the assessment unit which has made thedraft assessment order, through an automatedallocation system; (xx) the assessment unit shall, after considering thevariations suggested by the review unit, send thefinal draft assessment order to the National FacelessAssessment Centre; (xxi) the National Faceless Assessment Centre shall,upon receiving final draft assessment order followthe procedure laid down in— (a) sub-clause (a) of clause (xvi); or (b) sub-clause (b) of clause (xvi); (xxii) the assessee may, in a case where show-causenotice has been served upon him as per theprocedure laid down in sub-clause (b) of clause (xvi),furnish his response to the National FacelessAssessment Centre on or before the date and timespecified in the notice or within the extended time, ifany; (xxiii) the National Faceless Assessment Centre shall,— (a) where no response to the show-cause notice isreceived as per clause (xxii),— (A) in a case where the draft assessment order or thefinal draft assessment order is in respect of aneligible assessee and proposes to make any variationwhich is prejudicial to the interest of said assessee,forward the draft assessment order or final draftassessment order to such assessee; or (b) sub-clause (b) of clause (xvi); (xxii) the assessee may, in a case where show-causenotice has been served upon him as per theprocedure laid down in sub-clause (b) of clause (xvi),furnish his response to the National FacelessAssessment Centre on or before the date and timespecified in the notice or within the extended time, ifany; (xxiii) the National Faceless Assessment Centre shall,— (a) where no response to the show-cause notice isreceived as per clause (xxii),— (A) in a case where the draft assessment order or thefinal draft assessment order is in respect of aneligible assessee and proposes to make any variationwhich is prejudicial to the interest of said assessee,forward the draft assessment order or final draftassessment order to such assessee; or (B) in any other case, finalise the assessment as perthe draft assessment order or the final draftassessment order and serve a copy of such order andnotice for initiating penalty proceedings, if any, tothe assessee, alongwith the demand notice,specifying the sum payable by, or refund of anyamount due to, the assessee on the basis of suchassessment; (b) in any other case, send the response receivedfrom the assessee to the assessment unit; (xxiv) the assessment unit shall, after taking intoaccount the response furnished by the assessee,make a revised draft assessment order and send it tothe National Faceless Assessment Centre; (xxv) the National Faceless Assessment Centre shall,upon receiving the revised draft assessment order,— (a) in case the variations proposed in the reviseddraft assessment order are not prejudicial to theinterest of the assessee in comparison to the draftassessment order or the final draft assessmentorder, and— (A) in case the revised draft assessment order is inrespect of an eligible assessee and there is anyvariation prejudicial to the interest of the assesseeproposed in draft assessment order or the final draftassessment order, forward the said revised draftassessment order to such assessee; (B) in any other case, finalise the assessment as per the revised draft assessment order and serve a copyof such order and notice for initiating penaltyproceedings, if any, to the assessee, alongwith thedemand notice, specifying the sum payable by, orrefund of any amount due to, the assessee on thebasis of such assessment; (b) in case the variations proposed in the reviseddraft assessment order are prejudicial to the interestof the assessee in comparison to the draftassessment order or the final draft assessmentorder, provide an opportunity to the assessee, byserving a notice calling upon him to show-cause as towhy the proposed variation should not be made; (xxvi) the procedure laid down in clauses (xxiii),(xxiv) and (xxv) shall apply mutatis mutandis to thenotice referred to in sub-clause (b) of clause (xxv); (xxvii) where the draft assessment order or finaldraft assessment order or revised draft assessmentorder is forwarded to the eligible assessee as peritem (A) of sub-clause (a) of clause (xxiii) or item (A)of sub-clause (a) of clause (xxv), such assessee shall,within the period specified in sub-section (2) of section 144C, file his acceptance of the variations tothe National Faceless Assessment Centre; (xxviii) the National Faceless Assessment Centreshall,— (a) upon receipt of acceptance as per clause (xxvii);or (b) if no objections are received from the eligibleassessee within the period specified in sub-section(2) of section 144C,” 12.Thus, the assessment order under sub-section (3) ofSection 143 shall now have to be made in a facelessmanner in accordance with the procedure prescribed. 13.Sub-section (9) to Section 144B reads thus; section 144C, file his acceptance of the variations tothe National Faceless Assessment Centre; (xxviii) the National Faceless Assessment Centreshall,— (a) upon receipt of acceptance as per clause (xxvii);or (b) if no objections are received from the eligibleassessee within the period specified in sub-section(2) of section 144C,” 12.Thus, the assessment order under sub-section (3) ofSection 143 shall now have to be made in a facelessmanner in accordance with the procedure prescribed. 13.Sub-section (9) to Section 144B reads thus; “9) Notwithstanding anything contained in any otherprovision of this Act, assessment made under sub-section (3) of section 143 or under section 144 in thecases referred to in sub-section (2) (other than thecases transferred under sub-section (8), on or afterthe 1st day of April, 2021), shall be non-est if suchassessment is not made in accordance with theprocedure laid down under this section.” 14.Sub-section (9) referred to above makes it clear thatif the procedure laid down under Section 144B is notfollowed or complied with, the assessment would berendered non-est. When the legislature has thought fit touse the word non-est, it would mean a nullity. If it is to betreated as a nullity, then the argument of alternativeremedy of an appeal should fail. The Writ Court should not be hesitant to quash and set aside an order which couldbe termed as non-est. Why do we say that the impugnedassessment order in the present case could be termed asnon-est?. We have read and re-read the draft assessmentorder and also the impugned assessment order. Mr. Shahis right in his submission that the impugned assessmentorder is nothing but an exact reproduction of the draftassessment order. Nothing as pointed out by the assesseehas been taken into consideration. All that has been doneby the Assessing Officer is to express doubts as regardsthe genuineness of the entries. We fail to understand whatthe Assessing Officer has tried to convey. When apartnership firm says that it received a particular amountin its capital through its partners and the identity of suchpartners with necessary details is disclosed, any furtherinformation in that regard would be asking the assessee todisclose source of the source. Even this part has beentaken care of by the firm. In other words, the source of thesource has also been disclosed. 15.Section 68 of the Income Tax Act reads thus; “68. Cash Credits:- Where any sum is found creditedin the books of an assessee maintained for anyprevious year, and the assessee offers noexplanation about the nature and source thereof orthe explanation offered by him is not, in the opinionof the Assessing Officer, satisfactory, the sum socredited may be charged to income-tax as theincome of the assessee of that previous year. 16.Section 68 of the Act of 1961 says that where anysum is found credited in the books of an assesseemaintained for any previous year, and the assessee offersno explanation about the nature and source thereof or theexplanation offered by him is not, in the opinion of theIncome Tax Officer, satisfactory, the sum so credited maybe charged to income tax as the income of the assessee ofthat previous year. Therefore, according to Section 68,the first burden is on the assessee to satisfactorilyexplain the credit entry in the books of account of theprevious year. If the explanation given by the assessee issatisfactory, then that entry will not be charged with theincome of the previous year of the assessee. In case theexplanation offered by the assessee is not satisfactory orthe source offered by the assessee firm is not satisfactory,then in that case, the amount should be taken to be theincome of the assessee. 17.Once it is established that the amount has beeninvested by a particular person, be he a partner or anindividual, then the responsibility of the assessee-firm isover. The assessee-firm cannot ask that person whomakes investment where the the money invested isproperly taxed or not. The assessee is only to explain thatthis investment has been made by the particular individualand it is the responsibility of that individual to account forthe investment made by him. If that person owns thatentry, then the burden of the assessee-firm is discharged. It is open to the Assessing Officer to undertake furtherinvestigation with regard to that individual who hasdeposited this amount. So far as the responsibility of theassessee-firm is concerned, it is satisfactorily discharged.Whether that individual person is an income tax payer ornot or from where he has brought this money is not theresponsibility of the firm. The moment the firm gives asatisfactory explanation and produces the person who hasdeposited the amount, then the burden of the firm isdischarged and in that case that credit entry cannot betreated to be the income of the firm for the purposes ofincome tax. It is open to the Assessing Officer to takeappropriate action under Section 69 of the Act against theperson who has not been able to explain the investment. 18.In the aforesaid context, we may refer to and relyupon a very lucid and irudit judgment of the Gauhati HighCourt in the case of Nemi Chand Kothari vs.Commissioner of Income Tax & Ors., reported in(2004) 136 Taxman 213 (Gau), wherein the Division Benchof the Gauhati High Court has explained the meaning andscope of Section 68. We quote the relevant observationsas under; “13. While interpreting the meaning and scope ofSection 68, one has to bear in mind that normally,interpretation of a statute shall be general, in nature,subject only to such exceptions as may be logicallypermitted by the statute itself or by some other lawconnected therewith or relevant thereto. Keeping in view these fundamentals of interpretation ofstatutes, when we read carefully the provisions ofSection 68, we notice nothing in Section 68 to showthat the scope of the inquiry under Section 68 by theRevenue Department shall remain confined to thetransactions, which have taken place between theassessee and the creditor nor does the wording ofSection 68 indicate that Section 68 does notauthorise the Revenue Department to make inquiryinto the source(s) of the creditor and/or sub-creditor.The language employed by Section 68 cannot beread to impose such limitations on the powers of theAssessing Officer. The logical conclusion, therefore,has to be, and we hold that an inquiry under Section68 need not necessarily be kept confined by theAssessing Officer within the transactions, which tookplace between the assessee and his creditor, but thatthe same may be extended to the transactions,which have taken place between the creditor and hissub-creditor. Thus, while the Assessing Officer is,under Section 68, free to look into the source(s) ofthe creditor and/or of the sub-creditor, the burden onthe assessee under Section 68 is definitely limited.This limit has been imposed by Section 106 of theEvidence Act, which reads as follows : "Burden of proving fact especially withinknowledge.--When any fact is especially within theknowledge of any person, the burden of proving thatfact is upon him. Illustrations : (a) When a person does an act, with some intentionother than that which the character andcircumstances of the act suggest, the burden ofproving that intention is upon him. (b) A is charged with travelling on a railway without aticket. The burden of proving that he had a ticket ison him." "Burden of proving fact especially withinknowledge.--When any fact is especially within theknowledge of any person, the burden of proving thatfact is upon him. Illustrations : (a) When a person does an act, with some intentionother than that which the character andcircumstances of the act suggest, the burden ofproving that intention is upon him. (b) A is charged with travelling on a railway without aticket. The burden of proving that he had a ticket ison him." 14. On a careful reading of Section 106, we noticethat what is the source from which an assessee hasobtained the loan can be safely held to be a fact,which is actually within the special knowledge of theassessee ; hence, it is the burden of the assessee toshow the source(s) from which he has received theloans. Once the assessee discloses the source(s)from which he has received the loans, his burdenunder Section 106 stands discharged and the onus,then, shifts to the Assessing Officer to show, if hewants to treat the loan as an income of the assesseefrom undisclosed source, that the transaction(s)between the assessee and the creditor is/are notgenuine or that the creditor has no creditworthinessand/or that the money, which has been received bythe assessee in the form of loans, actually belongedto the assessee himself. 15. There can be no doubt that in order to establishthe receipt of cash credit as required under Section68, the assessee must satisfy three importantconditions, namely, (i) identity of the creditor, (ii)genuineness of the transaction, and (iii) financialcapability of the person giving the cash credit to theassessee, i.e., the creditworthiness of the creditor. 16. What, thus, transpires from the above discussionis that while Section 106 of the Evidence Act limitsthe onus of the assessee to the extent of his provingthe source from which he has received the cashcredit, Section 68 gives ample freedom to theAssessing Officer to make inquiry not only into thesource(s) of the creditor, but also of his (creditor's)sub-creditors and prove, as a result, of such inquiry,that the money received by the assessee, in the formof loan from the creditor, though routed through thesub-creditors, actually belongs to, or was of, theassessee himself. In other words, while Section 68gives the liberty to the Assessing Officer to enquireinto the source/sources from where the creditor hasreceived the money, Section 106 makes theassessee liable to disclose only the source(s) from where he has himself received the credit and it is notthe burden of the assessee to show the source(s) ofhis creditor nor is it the burden of the assessee toprove the creditworthiness of the source(s) of thesub-creditors. If Section 106 and Section 68 are tostand together, which they must, then, theinterpretation of Section 68 has to be in such a waythat it does not make Section 106 redundant. Hence,the harmonious construction of Section 106 of theEvidence Act and Section 68 of the Income-tax Actwill be that though apart from establishing theidentity of the creditor, the assessee must establishthe genuineness of the transaction as well as thecreditworthiness of his creditor, the burden of theassessee to prove the genuineness of thetransactions as well as the creditworthiness of thecreditor must remain confined to the transactions,which have taken place between the assessee andthe creditor. What follows, as a corollary, is that it isnot the burden of the assessee to prove thegenuineness of the transactions between his creditorand sub- creditors nor is it the burden of theassessee to prove that the sub-creditor had thecreditworthiness to advance the cash credit to thecreditor from whom the cash credit has been,eventually, received by the assessee. It, therefore,further logically follows that the creditor'screditworthiness has to be judged vis-a-vis thetransactions, which have taken place between theassessee and the creditor, and it is not the businessof the