The Hon’ble Bombay High Court in the case of Mantra Industries Ltd. v. National Faceless Assessment Centre [Writ Petition No.1625 of 2021 decided on October 11, 2021] has held that an assessment order passed by the Assessing Officer (“AO”) should necessarily be made with sound consideration and application of mind, and any absence thereof shall make the order liable to be set aside and would warrant imposition of substantial costs on such AO.
In the present petition, Mantra Industries Ltd. (“the Petitioner”) had impugned the assessment order dated 08.06.2021 read with the notice of demand dated 08.06.2021 issued under Section 156 of the Income Tax Act, 1961 (“the Act”) read with show cause notice dated 08.06.2021 issued for initiating penalty proceedings under section 274 read with Section 270A of the Act.
The Petitioner had received a notice dated 22.04.2021 for Assessment Year 2018-2019 calling upon to show cause as to why assessment should not be completed as per the draft assessment order. The Petitioner was to submit its response by 23:59 hours of 24.04.2021. On 23.04.2021, the Petitioner filed its response mentioning the objections and sought 20 days to fulfill the requirements as per the notice. Additionally, the Petitioner stated that it wished to object to the modification through a personal hearing. On 27.04.2021, the Petitioner filed its response giving the quantitative details which was sought for in the show cause notice issued. On 08.06.2021, the AO issued the impugned assessment order, show cause notice and notice of demand.
The Petitioner challenged the assessment order and the consequential show cause notice issued with the notice of demand on the contentions that the assessment order is an exact reproduction of the draft assessment order except one sentence which shows that the Petitioner’s request for an adjournment had not been considered, request for personal hearing had not been considered and most importantly the objection filed in response to the show cause notice with the draft assessment order had not been considered.
The said contentions were accepted by the Hon’ble Bombay High Court. The Court observed that any assessment made under Section 144B (9) of the Act shall be non-est if such assessment is not made in accordance with the procedure laid down under this section. It was held that the impugned order was non-est as it is an exact replica of the draft assessment order with the exception of one sentence which shows that no application of mind took place while making the order. Hence, the Hon’ble Bombay High Court set aside the impugned assessment order and consequential show cause notice and notice of demand while observing that if such orders are continued to be passed, the Hon’ble Bombay High Court will be constrained to impose substantial costs on the concerned Assessing Officer.
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