Faceless Assessment set aside as passed without considering assessee’s request for adjournment : High Court

ORDER

Mohammad Rafiq, CJ. – This petition has been filed by the petitioner-M/s. Preethi Himachal & Company, praying for quashing the assessment order dated 26-5-2021, of the assessment year 2018-19, passed by respondent No. 2-National Faceless Assessment Centre, Income-tax Department, New Delhi, under section 143(3) of the Income-tax Act, 1961 (for short, the Act), raising a demand of Rs. 15,24,18,329/-, accompanying demand notice under section 156 of the Act.

2. The challenge to the aforesaid demand notice/assessment order is made on the ground that the same has been passed in utter violation of the principles of natural justice, inasmuch as the proper opportunity was not provided to the petitioner to submit reply to the aforesaid notice under section 143(3) of the Act. It is contended that respondent No. 2 issued noticed dated 6-5-2021, to the petitioner containing the draft assessment order, directing it to file reply by 21-5-2021. Due to imposition of lockdown in the State of Tamil Nadu, where the headquarter of the petitioner-Company is situated and petitioner’s accountant Shri Uma Shankar, who is also the authorized signatory, was suffering from Covid-19, the petitioner filed an online application for adjournment on the portal of respondent No. 2, but without assigning any reason, respondent No. 2 rejected the adjournment request of the petitioner and passed the impugned order of assessment, raising a demand of Rs. 15,24,18,329/-.

3. Learned counsel for the petitioner has disputed the stand taken by respondents Nos. 2 and 3 in their reply that no such request for adjournment was received and has invited attention of this Court towards Annexure P-15 filed with the rejoinder, wherein the request of the petitioner has been acknowledged by the respondent on the portal on 21-5-2021 at 16.21 hours, stating “Request for adjournment for submission to notice 143(3) is submitted successfully” and the response has been sent to the petitioner on the same day at 18.21 hours in the terms “Response due date for submission to notice 143(3) is extended upto null”. It is submitted that the petitioner has not given reasons in his application as to why it was not possible for him to file reply to the notice and the reasons in the application submitted on the portal of respondent No. 2, vide Annexure P-6 on 21-5-2021, mentioned as “medical grounds”, which reads as under: —

“Dear Sir, The Accountant, who is attending this case has been affected by Covid and still not recovered from symptoms. Moreover lockdown is prevailing in Tamilnadu where the registered office of our company is located since 10th May, 2021. So we do not have access to office records. Hence request you to kindly give us 2 weeks time to reply to this notice.”

4. Learned counsel, in support of his arguments, has cited the orders passed by the High Court of Delhi in titled KBB Nuts (P.) Ltd. v. National Faceless Assessment Centre Delhi [2021] 435 ITR 622 Annexure P-7, and the High Court of Judicature at Madras in and WMP Nos. 11326 and 11327 of 2021, Magick Woods Exports (P.) Ltd. v. Addl./Jt./Dy./Asstt. CIT [W.P. No. 10693 of 2021, dated 28-4-2021], Annexure P-8, in which, in similar circumstances, the Hon’ble Courts had directly entertained the petitions and remitted the matters back to the assessing authority for passing fresh assessment order.

5. Learned Senior Advocate appearing for respondents Nos. 2 and 3, has opposed the writ petition and submitted that the notice to the petitioner under section 143(3) of the Act was served well in advance on 6-5-2021. The petitioner waited for the entire period upto 21-5-2021 and at the last moment submitted the request for adjournment. Therefore, it cannot be said that the opportunity of hearing, much-less sufficient opportunity, was not provided to the petitioner. The writ petition is liable to be dismissed because the petitioner has an alternative remedy of appeal.

6. Having regard to the fact that the enormous tax liability of Rs. 15,24,18,329/- has been created and the assertion of the respondents, in their counter that no request for adjournment was received, has been found to be incorrect, in view of the reply received by the petitioner from the respondents, which is placed on record with the rejoinder and remains un-rebutted. But this is sought to be clarified by stating that it may not have received on the portal of the assessing officer due to technical glitch. Even if that be so, the petitioner can not be made to suffer on that account. Beside the reasons, which the petitioner gave in his application seeking further time to file reply to the notice, have not at all been considered. In any case, the return was likely to become time barred only after 30-6-2021. We are, therefore, persuaded to entertain the writ petition, as in our view, the appropriate course would be to provide opportunity of hearing to the petitioner to file reply to the notice and also if it desires, provide virtual hearing and then pass a fresh assessment order.

7. In view of the above, we allow the writ petition and set aside the impugned order of assessment dated 26-5-2021, Annexure P-1, and remit the matter to respondent No. 2-National Faceless Assessment Centre, for passing fresh order of assessment, requiring the petitioner to file reply to the notice within 15 days and thereafter, if the petitioner so desires, provide it opportunity of hearing by virtual mode before passing fresh order of assessment.

8. Since the order of penalty under section 271B of the Act (Annexure P-14), being subsequent to the impugned order in the present case, therefore, the same shall not be given effect to, but shall abide by the order that maybe passed afresh. Pending application(s), if any, shall also stand disposed of.