In MAT 306 of 2023-CAL HC- Impugned Order is classical example as to how assessment should not be made: Calcutta HC quashes Assessment Order passed u/s 143(3) of Income Tax Act
Justice T.S. Sivagnanam & Hiranmay Bhattacharyya [16-03-2023]

Read Order: INDU GOENKA Vs. ASSESSMENT UNIT, INCOME TAX DEPARTMENT & Ors 

Tulip Kanth

Kolkata, March 28, 2023: While noting that 21 pages of the Assessment Order was verbatim extract of the show cause notice, the Calcutta High Court has quashed the Order while considering an intra-Court Appeal directed against the order passed in a writ petition challenging the Order u/s 143(3) r/w Section 144B of the Income Tax Act, 1961.

“The impugned assessment order is a classical example as to how an assessment should not be made. The assessing officer has reduced the procedure to an empty formality, which has to be deprecated”, the Division Bench of Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya asserted.

The main grounds contended by the Appellant was that the Assessment Order was in total violation of the principles of natural justice and it had ignored all the formalities to be observed as enumerated under the Standard Operating Procedure (SOP) for faceless assessment orders.

The High Court had dismissed the writ petition on the ground that the reasoning given by the assessing officer couldnot be examined in a writ proceeding as the Court couldnot act as an appellate authority. Questioning the correctness of the order, the appellant was before this Court by way of this intra-Court appeal.

On a careful consideration of the entire facts and circumstances of the case, the Bench opined that the appellant had not questioned the merits of the assessment but the decision making process. 

Elucidating further on the SOPs, the Bench stated that the Standard Operating Procedure (SOP) under the Faceless Assessment framed under Section 144B of the Act had been issued by the National Faceless Assessment Centre, Delhi and communicated to all the Principal Chief Commissioners, Income Tax. 

The procedure enumerates as to how the assessment has to be made and in paragraph N.1.3 it has been stated that the authority should ensure adherence to the principles of natural justice and reasonable opportunity to the assessee, timelines to be given for obtaining response to the show cause notice which have also been stipulated. Further, the SOP also gives the format of final assessment order in AU-9 which sets out the various heads under which the assessment order has to be passed with due discussion.

Clarifying this, the Bench opined that the Assessment Order was in compliance with the SOP as it contained requisite sub-headings but however, on a closure reading of the assessment order it was found that the assessing Officer had acted in a most perverse manner in passing the assessment order. 

“We say so because the first 21 pages of the assessment order is a verbatim extract of the show cause notice. In page nos.22 and 23 in two paragraphs the reply given by the assessee has been summarized. From page nos.23 to 36 of the assessment order it is once again extract of the show cause and ultimately at page nos.37 and 38 the total income has been determined and the assessment is completed”, the Bench noticed.

While deprecating the act of the Assessing Officer in reducing the procedure to an empty formality, the Bench quashed the assessment order and allowed the appeal as well as the writ petition.