Assessment order quashed as the department could not produce any evidence of service of the show cause notice & the draft assessment order

There have been a lot of glitches and technical issues in the income tax portal since the last few months. Here is one interesting case in favour of the assessee who have seen the adverse order due to such technical glitches.

Calcutta High Court in the case of Haldia Steels Limited Vs Union of India & Ors was concerned with the issue as to whether the revenue is bound to produce to record of service of show cause notices and draft assessment order and whether the court can take adverse view in case of non production of record of service.

In an interesting case the single bench of Calcutta high court in this case was dealing with a case where order u/s 147 read with 144B was passed and Mr Abhratosh Mazumdar and Mr Avra Mazumdar appearing for the party contended that the show cause notice, the draft assessment order and the revised draft assessment order were not served on the assessee and the department’s counsel also could not produce any evidence of such service by submitting that no records are maintained in the office regarding service of any show-cause notices, draft assessment or revised draft assessment upon the assessees which is very strange as to how the respondent/Income Tax Department is working and taking advantage of this situation and the Court having no cooperation and assistance from the respondent/Income Tax Department, orders in favour of the assessees/petitioners and prejudicial to the interest of department of revenue are being passed in several matters.

The Court on these facts quashed the assessment order with a liberty to the Assessing Officer concerned to serve a copy of the draft assessment and revised draft assessment upon the petitioner and proceed in accordance with law.

This judgement again highlights the latches and glitches on part of the department where the courts are coming to the rescue of assessees.

The copy of the order is as under:

     22

17.01.2022

   sb

Ct 2

IN THE HIGH COURT AT CALCUTTA

CONSTITUTIONAL WRIT JURISDICTION

APPELLATE SIDE

(Through Video Conference)

WPA 19684 of 2021

 

Haldia Steels Pvt. Ltd.

Vs.

Union of India & Ors.

Mr. Abhratosh Majumder, Mr. Avra Mazumder

…. For the petitioner.

Mr. S. N. Dutta, Mr. Madhu Jana

… For Union of India.

In this matter the petitioner has challenged the impugned assessment order dated 28th September, 2021, under section 147 read with section 144B of the Income Tax Act on the ground of violation of principle of natural justice by not serving copy of the draft assessment and revised draft assessment in question before passing the final impugned assessment order.

Learned advocate appearing on behalf of the respondent/Assessing Officer concerned submits that no records are maintained in the office regarding service of any show-cause notices, draft assessment or revised draft assessment upon the assessees which is very strange as to how the respondent/Income Tax Department is working and taking advantage of this situation and the Court having no cooperation and assistance from the respondent/Income Tax Department, orders in favour of the assessees/petitioners and prejudicial to the interest of department of revenue are being passed in several matters. It is expected that the Principal Chief Commissioner of Income Tax will take note of this observation and do the needful to protect the interest of the revenue and to see that department counsels are cooperated by the Assessing Officer concerned and there must be a coordination amongst the officer concerned and the judicial section of the department. This is  not  a solitary case, now-a-days I find in several cases that after the orders are passed for placing any record or instruction, in spite of repeated communication  from panel counsel as well as from the office of the Ministry of Law, the officers concerned are not providing appropriate instruction and not cooperating with their panel counsel at the time of hearing and because of this situation assessees/petitioners are benefited and the interest of the revenue is most likely to suffer.

Considering the submissions of the parties and taking into account failure on the part of the respondent/Income Tax Authorities concerned to produce the relevant records regarding service of the draft assessment and revised draft assessment upon the assessees/petitioners before passing the impugned assessment order, the impugned assessment order dated 28th September, 2021, being Annexure P-11 to the writ petition is quashed with a liberty to the Assessing Officer concerned to serve a copy of the draft assessment and revised draft assessment upon the petitioner and proceed in accordance with law.

Personal appearance of Mr. K. M. Dixit, Commissioner of Income Tax (Judicial) stands dispensed with.

Ministry of Law & Justice, Branch Secretariat shall communicate this order to the Chief CIT, West Bengal & Sikkim for taking necessary steps so that in future such incidents are not repeated.

With these observations,  the  writ  petition,  being WPA 19684 of 2021 is disposed of.

(Md. Nizamuddin, J.)