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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
ORDER PER SAKTIJIT DEY, VICE-PRESIDENT :
This is an appeal by the assessee against the order dated 18.01.2023 passed by National Faceless Appeal Centre (NFAC), Delhi pertaining to Assessment Year 2018-19.
The effective grounds raised
by assessee are as under: 1. “That on facts and in law as taken, the total income as determined by CPC, Bangalore in place of returned income is totally wrong and unjustified. You are requested to kindly consider the returned income as assessed income as no addition was made to the returned income in the assessment order.
2. That on facts and in law disturbing the returned income without issuing any show cause notice is totally wrong and unjustified. Assessing officer has not followed the procedure prescribed for Sanspareils Greenlands Pvt. Ltd. vs. ACIT 2 faceless scrutiny. In assessment order Ld AO has taken total income of Rs. 12,66,35,350/- as determined by CPC under section 143(1) of the Act in place of returned income of Rs. 12,46,29,437/-. Therefore, without issuing any show cause notice, the assessment order passed under section 143(3) of the Act is deserves to be amended by taking the returned income as income assessed.”
Briefly the facts relating to the issue in dispute are, the assessee is a residential corporate entity. For the assessment year under dispute, assessee filed its return of income on 17.10.2018 declaring total income of Rs.12,46,29,440/-. The return of income was processed under Section 143(1) of the Act by the Central Processing Centre (CPC) on 01.10.2019 determining the total income at Rs.12,66,35,350/-. The variation between the income returned and income determined was due to disallowance of deduction claimed in respect of Provident Fund (PF)/Employees’ State Insurance (ESI). Be that as it may, assessee’s case was selected for scrutiny assessment on following issues: i). Exports / Imports ii). Duty Drawback
As observed by the Assessing Officer, information relating to the scrutiny issues were called for through statutory notices issued under Section 142(1) and 143(2) of the Act. He has also observed that in response to these notices, the assessee has submitted the details/information called for. After verifying the details, the Assessing Officer ultimately completed the assessment vide order dated 02.03.2021 determining the total income at Rs.12,66,35,350/-, the same figure at which the CPC had determined the total income at the time of processing the return of income under Section 143(1) of the Act. Against the assessment order so passed, assessee preferred an appeal before the First Appellate Authority inter alia on the ground Sanspareils Greenlands Pvt. Ltd. vs. ACIT 3 that though the income returned by the assessee was enhanced to a higher figure however, no show-cause notice was issued to the assessee.
Before us, Learned Counsel submitted, after introduction of Faceless Assessment Procedure, as per Section 144B of the Act it is mandatory to issue show-cause notice before disturbing the returned income. In respect of such contention, he relied upon the following decisions: i). CIT vs. Contimeters Electricals Pvt. Ltd. reported in 317 ITR 249 ii). Gurgaon Realtech Ltd. vs. National Faceless Assessment Centre [2021] 127 taxmann.com 726 (Del.)
Thus, he submitted, since, the Assessing Officer has not provided a fair opportunity of being heard to the assessee prior to disturbing the returned income to the prejudice of the assessee, the assessment order should be set aside.
The Learned Departmental Representative relied upon the observations of first appellate authority. He submitted, since, the Assessing Officer while completing the assessment has accepted the income determined under Section 143(1) of the Act, there was no need for issuing show-cause notice to the assessee.
We have considered rival submissions and perused material on record. The limited grievance of the assessee is that though as per the procedure laid down in the context of Faceless Assessment Scheme, the Assessing Officer is duty bound to issue a show-cause notice to the assessee under Section 144B of the Act, in case, he proposes to Sanspareils Greenlands Pvt. Ltd. vs. ACIT 4 make variation to the returned income, which results in enhancement, a show-cause notice has to be issued to the assessee, however, the mandatory procedure has not been followed. Considering the limited grievance of the assessee that prior to completion of assessment, no show-cause notice was issued, which, in our view, is an irregularity which can be cured if the assessee gets an opportunity of fair hearing, we are inclined to set aside the order of the First Appellate Authority and restore the issues back to the file of the Assessing Officer for de novo assessment after providing due and reasonable opportunity of being heard to the assessee. Grounds are allowed for statistical purposes.