SUJATHA REVIKUMAR vs. JOINT COMMISSIONER OF INCOME TAX

JUDGMENT The petitioner, through various proprietorship concerns is engaged in the business of money lending on deposit of gold ornaments as security and is functioning on the basis of licenses issued under the Kerala Money Lenders Act, 1958. During the assessment year 2021-22, the petitioner had written off a sum of Rs.7,68,97,170/- on account of fraud committed by some staff, who had made false entries regarding gold loans. It is stated that a police case has been registered and the same is being proceeded with. After the introduction of the National Faceless Assessment, the case of the petitioner was selected for the purpose of faceless assessment as is evident from Ext.P1 notice. The grievance of the petitioner is that the assessment has been concluded as per Ext.P14 without following the procedure which is prescribed under Section 144B of the Income Tax Act, 1961 ('the Act' for short). As per Section 144B (1) (xvi) of the Act, on receipt of the income or loss determination proposal from the assessment unit, the National Faceless Assessment Centre may convey to the assessment unit to prepare draft order in accordance with the income or loss determination proposal which shall thereafter prepare a draft order or assign the income or loss determination proposal to a review unit through an automated allocation system for conducting review of such proposal. Going by the procedure, the draft assessment order is to be conveyed to the assessee who can submit his response to the draft assessment. The Statute also gives a right to the assessee for requesting a personal hearing in case there is any variation which is prejudicial to the assessee as proposed in the draft assessment order. The petitioner submits that in the case on hand, Ext.P14 has been issued even without preparing a draft assessment order. It is hence submitted that the procedure prescribed by law has been violated and consequently there is also a violation of principles of natural justice, since the petitioner is not put on notice by issuing a draft assessment order. This Court as well as the Hon’ble Supreme Court have in several similar matters set aside the assessment orders and directed the assessing Authority to re-do the assessment in accordance with the procedure laid down in Section 144B. See National Faceless Assessment Centre & Ors. v. Automotive Manufacturers (P) Ltd. [2023 SCC Online SC 631], Ellathkandi Khaleel Ahammed Vs. Union of India & Ors. [2022 SCC Online KER 8978].

JUDGE dsn