V.P.HASNA vs. THE ADDITIONAL/JOINT /DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER,

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WP(C)/12849/2022HC KeralaKLHC01025975202226 October 2023Bench: HONOURABLE MR. JUSTICE D. K. SINGH5 pages
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What did the High Court hold?

The High Court allowed the writ petition and set aside the impugned assessment order (Ext.P8). The Court accepted the respondent's submission that due to the limitations of the Faceless Assessment Scheme, it was difficult to provide the assessee with copies of statements recorded under Section 131 and afford an opportunity for cross-examination. The Court noted that current CBDT guidelines mandate centralization of cases involving survey and search operations for physical assessment. Consequently, the Court directed that the petitioner's case be centralized with the jurisdictional Central Circle, Thrissur, for a fresh assessment in accordance with law. The Court clarified that the petitioner would not be able to raise objections regarding limitation for finalizing the assessment. The petitioner was granted liberty to pursue further remedies if aggrieved by the fresh assessment order. Any pending interlocutory applications were dismissed.

What were the facts?

The petitioner, V.P. Hasna, filed a writ petition challenging an assessment order (Ext.P8) passed by the National Faceless Assessment Centre under Section 147 read with Section 144B of the Income Tax Act, 1961. The assessment followed search and survey operations. The petitioner's primary grievance was that she was not provided with copies of statements recorded from third parties under Section 131 of the Act, nor was she given an opportunity to cross-examine those individuals whose statements were used in finalizing the assessment. The respondent filed a counter affidavit acknowledging difficulties in providing such opportunities under the Faceless Assessment Scheme.

What were the issues?

1. Whether the assessment order passed under the Faceless Assessment Scheme is vitiated due to the denial of copies of third-party statements recorded under Section 131 of the Income Tax Act, 1961, and the denial of an opportunity to cross-examine the deponents, thereby violating principles of natural justice? Assessee's Contention: The assessee argued that the assessment order was bad in law as she was not provided with copies of third-party statements recorded under Section 131 of the Act and was denied the opportunity to cross-examine the persons whose statements were considered. This prejudiced her case. Revenue's Contention: The respondent, in its counter affidavit, conceded that under the Faceless Assessment Scheme, it was difficult to provide copies of Section 131 statements and facilitate cross-examination. It further stated that as per CBDT guidelines, cases involving survey and search operations should be centralized and assessed physically, not under the Faceless Scheme. Based on this, the revenue suggested setting aside the impugned order and centralizing the case for fresh assessment.

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 131

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH THURSDAY, THE 26TH DAY OF OCTOBER 2023 / 4TH KARTHIKA, 1945 WP(C) NO. 12849 OF 2022 PETITIONER/S: V.P.HASNA AGED 32 YEARS VADAKKUMPALA HOUSE, BASHEER BUILDINGS, THAZHE CHOVVA, KANNUR-670018. BY ADVS. HARISANKAR V. MENON MEERA V.MENON RESPONDENT/S: THE ADDITIONAL/JOINT /DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, DELHI-110001. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 26.10.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C) NO. 12849 OF 2022 2 J U D G M E N T The present writ petition has been filed impugning the assessment order, Ext.P8, passed by the respondent under the provisions of Section 147 read with Section 144B of the Income Tax Act, 1961 ('Act', for short), after conducting search and survey operations in the premises of the petitioner and third parties. The order impugned herein was passed by the National Faceless Assessment Centre. 2. The writ petition has been filed impugning the assessment order, Ext.P8, on the ground that the petitioner was not given copies of statements of third parties recorded under Section 131 of the Act and did not afford an opportunity to cross- examine the persons, whose statements were recorded as above, which were considered while finalising the assessment. 3. Counter affidavit has been filed on behalf of the respondent. It has been stated in paragraph No.11 of the counter affidavit that it could be realised that under the Faceless Assessment Scheme,

WP(C) NO. 12849 OF 2022 3 because of its limitation, it is difficult to provide the assessee an opportunity to get copies of the statements recorded under Section 131 of the Act and conduct cross-examination of the persons, whose statements were recorded under Section 131 of the Act. It has been further stated that as per the current CBDT guidelines, all cases, where survey and search operations have been carried out, are to be centralised and assessment in such cases are to be completed in physical mode and not under the Faceless Assessment Scheme. Based on these guidelines, assessment proceedings in the case of the assessee herein for the assessment year 2018-19 has already been re-opened and centralised to the jurisdictional central circle., i.e., Central Circle, Thrissur. It has been submitted that in view thereof, this Court may set aside the impugned assessment order herein with direction to centralise the petitioner's case with the jurisdictional Central Circle for assessment afresh, in accordance with law.

WP(C) NO. 12849 OF 2022 4 4. Considering the aforesaid stand of the respondent in the counter affidavit, the present writ petition is allowed and the order impugned herein, Ext.P8, is set aside. The petitioner's case is directed to be considered by the jurisdictional Central Circle, Thrissur, in accordance with law, and finalise the assessment proceedings. Needless to say that since the matter has been remanded back, the petitioner will not be able to raise objection of limitation in finalising the assessment. If the petitioner is aggrieved by the assessment order so passed by the respondent, it will be open to her to take further proceedings that could be available to her under the Act. Pending interlocutory application, if any, in the writ petition stands dismissed.

Sd/- DINESH KUMAR SINGH

JUDGE jg

WP(C) NO. 12849 OF 2022 5 APPENDIX OF WP(C) 12849/2022 PETITIONER EXHIBITS Exhibit P1 COPY OF PROCEEDINGS OF THE INCOME-TAX AUTHORITY Exhibit P2 COPY OF NOTICE ISSUED BY RESPONDENT TO THE PETITIONER Exhibit P3 COPY OF REPLY FILED BY THE PETITIONER Exhibit P4 COPY OF SHOW CAUSE NOTICE ISSUED BY THE RESPONDENT Exhibit P5 COPY OF LETTER SUBMITTED BY THE PETITIONER BEFORE THE RESPONDENT Exhibit P6 COPY OF LETTER SUBMITTED BY THE PETITIONER BEFORE THE RESPONDENT Exhibit P7 COPY OF LETTER SUBMITTED BY THE PETITIONER BEFORE THE RESPONDENT Exhibit P8 COPY OF ASSESSMENT ORDER ISSUED BY THE RESPONDENT.

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