National E-Assessment Centre Acted Thick Skinned: Gujarat High Court

The division bench of Justice N.V. Anjaria and Justice Bharghav D. Karia has observed that the assessment proceedings were remanded to the Assessing Officer to be taken up afresh from the stage of the draft assessment order. The court directed the assessing officer to pass an appropriate order after giving the petitioner an opportunity to file a reply.

The petitioner/assessee is a Hindu Undivided Family. It has filed the petition through the Karta of the HUF. For the Assessment Year 2018-19, a return of income was to be filed by the petitioner-assessee on August 30, 2018. It was followed by a notice dated 22.09.2019 under Section 143 (2) of the Act. The faceless assessment was advertised by the department under the Faceless Assessment Scheme, 2019. The petitioner was required to furnish documents, for which notice under Section 142(1) was issued.

In response to the Department's demand for the request, the assessee requested adjournment on January 29, 2021. There was a further reminder by the department and the reply was sent by the assessee. It appears that the assessee responded to the notice as well as the reminder by stating, inter alia, that certain new grounds were raised by the department in respect of the investment in the mutual fund.

On May 16, 2021, the Department passed a draft assessment order. In the draft assessment order, the Department dealt with the income from business, the interest income part, and additions under Section 68 relating to the loan transaction. It appeared that the assessee wanted to respond to the draft assessment order by filing a reply.

The petitioner/assessee was confronted with a draft assessment order under Section 144B of the Income Tax Act, 1961. The assessee wanted to submit his response to the assessment order, however, the department did not grant time to file the reply.

The question posed was whether the department was justified in not granting time to file a reply, especially since the assessee sought time during the pandemic period.

The petitioner contended that the notification dated August 13th, 2020 provides an opportunity to the assessee, in case a modification is proposed, to show cause as to why the assessment should not be completed as per the draft assessment order. The Scheme regarding faceless assessment, which would result in the draft assessment order as reflected in the notification dated August 13th, 2020, has now been translated into statutory format with effect from 01.04.2021. In other words, at the time when the final order is passed, the Scheme, including the provision for giving opportunity to the assessee pursuant to the draft assessment order, is a statutory requirement.

The court held that the petitioner deserved to be granted relief. The assessment order under Section 143 (3) read with Section 144B of the Act and the notice under Section 274 read with Section 270A are set aside.

Case Title: Virdichand Bawandas HUF Karta of HUF Pawankumar Virdhichand Agarwal Versus The National E-Assessment Centre

Citation: R/Special Civil Application No. 12864 of 2021

Citation: 2022 LiveLaw (Guj) 273

Counsel For Appellant: Advocate Sudhir Mehta

Counsel For Respondent: M R Bhatt & Co.

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