In a significant order, the Bombay High Court has directed the Assessing Officer of the National Faceless Assessment Centre (NFAC) to pay a sum of Rs 25,000 as donation to PM Cares for passing an assessment order without applying principles of natural justice and for failing to give reasonable time to an assessee to file response to Demand Notice under the Faceless Assessment Scheme.
“The imposition of costs on the Assessing Officer may not act as a penalty. Still, it will serve as a deterrent for implementing the Faceless Assessment Scheme to achieve its purpose and object,” observed a division bench of justices KR Shriram and Amit Borkar while asking the officer to pay amount in two weeks.
The HC was hearing a petition filed by one Parag Shah challenging the April 20, 2021, Assessment Order passed by the officer after reassessing his income by adding a sum of Rs 12,57,02,560 while computing the income tax.
After passing the order, the officer had issued a demand notice on the same day, April 20, 2021.
Shah received a notice on February 14 this year to which he filed three different replies by February 24.
Two months thereafter Shah received a notice on April 17 at 4.30 pm, digitally singed at 14:43:37 IST, “calling upon him to show cause as to why the assessment should not be completed as per the Draft Assessment Order”. He was asked to submit reply by April 20.
The HC has noted that “this (notice) was the time when there was total lock-down in Maharashtra including Mumbai due to Covid pandemic”.
As Shah was given only one working day time to respond, he filed a request on April 19 (April 18 was a Sunday) seeking 10 days to respond in view of the problems faced due to the Covid-19 situation.
Disapproving with the assessment officer’s attitude conduct, the HC said: “According to us, respondents (NFAC) have been most unreasonable and unfair to an assessee in giving such a short time to respond, whatever could be their reason.”
What irked the HC further was the reply filed by NFAC stating that they gave short time since the assessment was getting time barred on April 30 and by seeking ten days adjournment Shah had intended to put pressure of time on the Assessing Officer.
“It is like adding insult to injury,” observed HC saying that the officer could have at least given five days to Shah to respond.
The HC said: “We are also shocked by the tenor of the affidavit in reply where petitioner is accused of bringing pressure on the Assessing Officer… In our view, this stand of respondents is most unfortunate and gives an impression of high handedness. We note our displeasure at this unacceptable stand of respondents and we only hope that respondents will be gracious in owning their mistakes and not take such unreasonable stand.”
Besides, the NFAC contended that Shah could have filed an appeal before concerned authority instead of a petition in HC.
“Once again, we have to observe that this stand of respondents smacks of perversity and is totally unacceptable,” said HC adding: “In the circumstances, we have no hesitation in setting aside the impugned Assessment Order, Notice of Demand as well as Show Cause Notice, all dated 20th April, 2021.”
The judges said it, “is a fit case where a direction needs to be issued to the Assessing Officer to pay costs to bring judicious approach amongst Assessing Officers for effective implementation of faceless assessment in its letter and spirit,” said HC adding: “Undue haste in passing order of assessment runs counter to the purpose behind introduction of Faceless Assessment Scheme resulting in over-burdening of the Courts.”
The HC has kept the petition for hearing on December 15 to check compliance of its order.
