An assessment order requires to meet all the requirements of the Act, which includes mandatory issuing of cause notice as well as draft assessment order. This was held in the judgment passed by a two judge bench comprising HON’BLE JUSTICES MR. JUSTICE MANMOHAN and MR. JUSTICE NAVIN CHAWLA, in the matter NOVELTY MERCHANTS PRIVATE LIMITED V. NATIONAL FACELESS ASSESSMENT CENTRE DELHI & ORS., dealt with an issue where the petitioner filed a petition challenging the Assessment Order, Demand Notice and Notice for Penalty dated 23rd April 2021 passed by the respondents the Income Tax Act 1961 for the AY 2018-19.
Counsel for the Petitioner states that the impugned assessment order has been passed without issuing the mandatory show-cause notice and draft assessment order under Section 144B(1)(xvi)(b) of the Act. He states that the Respondent’s action is violative of the principles of natural justice and Section 144B. He also states that in the absence of a show cause notice, the petitioner has been deprived of an opportunity to seek personal hearing.
The Act states that the National Faceless 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. It also states that provide an opportunity to the assessee, in case any variation prejudicial to the interest of assessee is proposed, by serving a notice calling upon him to show cause as to why the proposed variation should not be made.
The Court is also of the view that Section 144B(1)(xvi)(b) mandatorily provides for issuance of a show cause notice and draft assessment order before issuing the final assessment order.
After hearing both the parties The hon’ble Delhi High court allowed the petition and held the impugned Assessment Order, Demand Notice and Notice for Penalty are set aside and the matter is remanded back to the Assessing Officer, who shall issue a show cause notice as well as draft assessment order and thereafter pass a reasoned order in accordance with law as the present case no prior show cause notice as well as draft assessment order have been issued, there is a violation of principles of natural justice as well as mandatory procedure prescribed under “Faceless Assessment Scheme” and as stipulated in Section 144B of the Act. It also held that it is a settled law that when there is a violation of principles of natural justice, the availability of an appellate remedy does not operate as a bar to the maintainability of the writ petition.