Wp/1221/2021 Of Abacus Real Estate Private Ltd v. Deputy Commissioner Of Income Tax, Circle 14 (1) (1) And 3 Ors

Digitally signedby MEERA1/5MEERAMAHESHMAHESHJADHAVDate:JADHAV2021.10.2812:00:00+0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONWRIT PETITION NO. 1221 OF 2021 Abacus Real Estate Pvt Ltd. ….Petitioner V/s.Deputy Commissioner of Income Tax-Circle 14(1)(1) Mumbai & Ors. …Respondents ---- Mr. P. J. Pardiwalla, Senior Advocate i/b Ms Vasanti B Patel for PetitionerMr. Akhileshwar Sharma for Respondents - Revenue ---- P.C. : CORAM : K.R. SHRIRAM & AMIT B. BORKAR, JJ DATED : 25[th] OCTOBER 2021 1Petitioner is impugning the assessment order, demand notice andpenalty notice all dated 19[th] April 2021 for A.Y.-2018-109 on the groundsthat respondents have failed and neglected to follow the mandatoryprocedure prescribed under Section 144B of the Income Tax Act, 1961 (thesaid Act), in as much as the show cause notice with a draft assessment order,was not even sent to petitioner. Therefore, petitioner was not provided anopportunity to show cause as to why the proposed variation should not bemade. Clauses (xiv), (xvi), (xvii), (xviii), (xix), (xx), (xxi) of Sub Section (1) of Section 144B of the Act, read as under: (xiv) the assessment unit shall, after taking into account all therelevant material available on the record make in writing, a draftassessment order or, in a case where intimation referred to in clause(xiii) is received from the National Faceless Assessment Centre, makein writing, a draft assessment order to the best of its judgment, eitheraccepting the income or sum payable by, or sum refundable to, theassessee as per his return or making variation to the said income orsum, and send a copy of such order to the National FacelessAssessment Centre;relevant material available on the record make in writing, a draftassessment order or, in a case where intimation referred to in clause(xiii) is received from the National Faceless Assessment Centre, makein writing, a draft assessment order to the best of its judgment, eitheraccepting the income or sum payable by, or sum refundable to, theassessee as per his return or making variation to the said income orsum, and send a copy of such order to the National FacelessAssessment Centre; (xvi) the National Faceless Assessment Centre shall examine the draftassessment order in accordance with the risk management strategyspecified by the Board, including by way of an automatedexamination tool, whereupon it may decide to— (a) finalise the assessment, in case no variation prejudicial to theinterest of assessee is proposed, as per the draft assessment order andserve a copy of such order and notice for initiating penaltyproceedings, if any, to the assessee, along with the demand notice,specifying the sum payable by, or refund of any amount due to, theassessee on the basis of such assessment; or (b) provide an opportunity to the assessee, in case any variationprejudicial to the interest of assessee is proposed, by serving a noticecalling upon him to show cause as to why the proposed variationshould not be made; or (c) assign the draft assessment order to a review unit in any oneRegional Faceless Assessment Centre, through an automatedallocation system, for conducting review of such order; (xvii) the review unit shall conduct review of the draft assessmentorder referred to it by the National Faceless Assessment Centrewhereupon it may decide to— (a) concur with the draft assessment order and intimate the NationalFaceless Assessment Centre about such concurrence; or (b) suggest such variation, as it may deem fit, in the draft assessmentorder and send its suggestions to the National Faceless AssessmentCentre; (xviii) the National Faceless Assessment Centre shall, upon receivingconcurrence of the review unit, follow the procedure laid down in— (a) sub-clause (a) of clause (xvi); or (b) sub-clause (b) of clause (xvi); (xvii) the review unit shall conduct review of the draft assessmentorder referred to it by the National Faceless Assessment Centrewhereupon it may decide to— (a) concur with the draft assessment order and intimate the NationalFaceless Assessment Centre about such concurrence; or (b) suggest such variation, as it may deem fit, in the draft assessmentorder and send its suggestions to the National Faceless AssessmentCentre; (xviii) the National Faceless Assessment Centre shall, upon receivingconcurrence of the review unit, follow the 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 receivingsuggestions for variation from the review unit, assign the case to anassessment unit, other than the assessment unit which has made thedraft assessment order, through an automated allocation system; (xx) the assessment unit shall, after considering the variationssuggested by the review unit, send the final draft assessment order tothe National Faceless Assessment Centre; (xxi) the National Faceless Assessment Centre shall, upon receivingfinal draft assessment order follow the procedure laid down in— (a) sub-clause (a) of clause (xvi); or (b) sub-clause (b) of clause (xvi); Sub Section 5 of Section 144B reads as under: 5) All communication among the assessment unit, review unit,verification unit or technical unit or with the assessee or any other person with respect to the information or documents or evidence orany other details, as may be necessary for the purposes of making afaceless assessment shall be through the National Faceless AssessmentCentre. 2Petitioner had received certain communications from respondentsunder Section 143(2) and Section 142(1) of the Act to which, petitioner hadresponded. Mr. Pardiwalla submitted that respondents had not accepted thereturns filed by petitioner as it was and were proposing to make a variationprejudicial to the interest of petitioner and, therefore, ought to have issuedto petitioner a show cause notice with draft assessment order. Mr.Pardiwalla submitted that even the assessment order dated 19[th] April 2021which is impugned in the petition, does not even state that such show causenotice was sent with draft assessment order. 3We have perused the assessment order impugned in the petition withthe assistance of Mr. Pardiwalla. The assessment order is totally silent aboutthe issuance of any show cause notice with draft assessment order. 4Mr. Sharma submitted that it is petitioner’s case that no draftassessment order was served whereas, it is respondents’ case that draftassessment order has been issued on 12[th] April 2021 and relied upon anaffidavit in reply as well as sur-rejoinder filed by one Jayshree Thakur. Mr.Sharma submitted that details of chronological order of events reproducedin the affidavit in reply would show that the draft assessment order has beenserved on petitioner. We are not inclined to accept the explanation given bythe affiant on behalf of respondents because if any such draft assessment 3We have perused the assessment order impugned in the petition withthe assistance of Mr. Pardiwalla. The assessment order is totally silent aboutthe issuance of any show cause notice with draft assessment order. 4Mr. Sharma submitted that it is petitioner’s case that no draftassessment order was served whereas, it is respondents’ case that draftassessment order has been issued on 12[th] April 2021 and relied upon anaffidavit in reply as well as sur-rejoinder filed by one Jayshree Thakur. Mr.Sharma submitted that details of chronological order of events reproducedin the affidavit in reply would show that the draft assessment order has beenserved on petitioner. We are not inclined to accept the explanation given bythe affiant on behalf of respondents because if any such draft assessment order had been issued, that would have certainly found a mention in theassessment order impugned in the petition. Moreover, in the affidavit inreply, it is stated that the draft assessment order under Section 143(3) of theAct was issued on 12[th] April 2021 by the Assessing Officer – Regional E-Assessment Unit to petitioner. Apart from the fact that it is petitioner’s casethat no such draft assessment order was received and no evidence that it hasbeen served, has been filed, it is respondents’ case in the affidavit in replythat the Regional E-Assessment Unit issued the draft assessment order.Provisions of Section 144B in our view are mandatory provisions becausesub-Section 9 of Section 144B states that if the assessment is not made inaccordance with the procedure laid down under Section 144B, theassessment shall be non est . Sub Section 5 reproduced earlier provides thatall communication among the assessment unit, review unit, verification unitor technical unit or with the assessee or any other person with respect to theinformation or documents or evidence or any other details, as may benecessary for the purposes of making a faceless assessment shall be throughthe National Faceless Assessment Centre. Even the final assessment orderhas been issued by the National Faceless Assessment Centre. Therefore,even for a moment we accept what the affidavit in reply says that RegionalUnit sent draft assessment order under Section 143(3) of the Act, it couldnot have sent any such communication to the assessee. The saidcommunication should have originated from the National FacelessAssessment Centre. 5Affidavit in reply has not been filed by the person who passed theassessment order. Nobody knows, even counsel does not know, who is thefaceless person who passed the assessment order. The only person whocould have answered this point categorically was the person who wrote andpass the assessment order and not some other officer who is relying uponinput received from the National Faceless Assessment Center . 6In the circumstances, we have to hold that the assessment order hasbeen issued without following the mandatory procedure prescribed underSection 144B of the Act, in as much as, if the review unit of respondents hadreviewed the draft assessment order, it should have followed the procedurelaid down under sub clause (b) of clause (xvi) of sub-Section (1) of Section144B. 7In the circumstances, the impugned order, demand notice and penaltynotice all dated 19[th] April 2021 for A.Y.-2018-2019 are quashed and setaside as non est . It is, however, open to respondents to take such steps asadvised in accordance with law for the purpose of making the facelessassessment. We also clarify that we have not made any observations on themerits of the case. 8Petition disposed. (AMIT B. BORKAR, J) (K.R. SHRIRAM, J.)