POPULAR VEHICLES AND SERVICES LIMITED vs. THE ADDITIONAL/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX,INCOME TAX OFFICER

As per the procedure for assessment provided under Clause 5 of the Scheme, after an intimation is given that the assessment will be completed as per the Scheme, a requisition is required to be issued for obtaining information. Thereafter, a draft assessment order ought to be prepared by the assessing unit which will be send it to the National e-assessment Centre, who shall, if it intends to modify the return filed by the assessee, issue a showcause notice, calling upon the assessee to explain why the assessment should not be completed as per the draft assessment order.

The specific procedure to be followed once a draft assessment order is prepared, proposing to modify the return of the assessee is dealt with in clause 5(xvi) (a) & (b) of the Scheme. For the purpose of easier comprehension the said provision is extracted as below:-

Under the Scheme, once a show cause notice is issued under clause 5(xvi)(b), then, as per clause (xxii), the National e-assessment Centre will have to finalize the draft assessment through two modes. The WP(C) NO. 14181 OF 2021 5 first mode is to finalize the proposed assessment if it does not cause prejudice to the assessee. However, if even after response from the assessee, a modification, to the prejudice of the assessee is proposed then, one more opportunity ought to be granted by serving another notice to the assessee and based upon that response finalize the draft assessment order. The aforesaid procedure is dealt with in clause 5(xxii) and (xxv) which are extracted below:- “(xxii) the assessee may, in a case where show-cause notice under sub clause(b) of clause (xvi) has been served upon him, furnish his response to the National e- assessment centre on or before the date and time specified in the notice or within the extended time, if any; (xxv) the National e-assessment Centre shall, upon receiving the revised draft assessment order, (a) in case no modification prejudicial to the interest of the assessee is proposed with reference to the draft assessment order, finalise the assessment as per the procedure laid down in sub-clause (a) of clause (xvi); or (b) in case a modification prejudicial to the interest of the assessee is proposed with reference to the draft assessment order, provide an opportunity to the assessee, by serving a notice as per the WP(C) NO. 14181 OF 2021 6 procedure laid down in sub-clause (b) of clause(xvi);”

The grievance of the petitioner against the impugned order of assessment, in the instant case, is that the Assessing Officer proposed to modify the return filed by the petitioner without issuing the mandatory showcause notice contemplated under Clause 5(xvi)(b) of the Scheme and hence, according to the petitioner, the assessment order itself is bad in law.

A statement has been filed on behalf of respondents, pointing out that the assessee had e-filed its original return for 2018-19 on 31/10/2018 and on finding inconsistencies in the return, a communication was sent on 23/03/2019. Thereafter the return was processed and after selecting the case for scrutiny, assessment was carried out under the scheme. Respondents further stated that a notice dated 22/09/2019 was issued under Section 143(2) and thereafter a notice under Section 142(1) dated

I have considered the rival contentions, raised by the learned Senior Counsel Sri.Joseph Markos duly instructed by Sri.Alexander Joseph Markos as well as the learned Standing Counsel Sri.Jose Joseph on behalf of respondents.

On a perusal of the order of assessment, it is revealed that the assessing Officer had, after calling for the objections of the assessee, decided to modify the return submitted by the assessee. By virtue of modification contemplated by the National e- assessment Centre the provisions of Clause 5(xvi)(b) of the Scheme gets automatically attracted thereby

On a perusal of the assessment order, I find that, the assesee was never served with a draft assessment order or the showcause notice while proposing to modify the return submitted by the petitioner. There is a clear violation of the procedure involved in arriving at the assessment order. The respondents failed to serve the showcause notices or the draft assessment order upon the assessee.

When the decision making process is contrary to law or is vitiated, juri iction under Article 226 of the Constitution of India can be invoked. Accordingly, I find that there is violation of the procedure while issuing the assessment order Ext.P7. Therefore Ext.P7 is set aside and the 1st respondent- Assessing Officer is directed to reconsider the case of the petitioner by WP(C) NO. 14181 OF 2021 9 issuing the draft assessment order and the necessary showcause notice as contemplated under the Faceless Assessment Scheme in Ext.P8 and after eliciting the objections/explanations of the assessee within a reasonable time, pass fresh orders thereon, in accordance with law, in a time bound manner. This writ petition is allowed as above. BECHU KURIAN THOMAS JUDGE AJM