Bombay HC directed Tax officer to pay Donation of 25k in PM Cares Fund for not following law

In an interesting verdict of Bombay High Court, in case of Parag Kishorchandra Shah Petitioner V/s. The National Faceless Assessment Centre and Ors., court gave direction 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. Further Stating 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.

Fact of Case

Petitioner is impugning the Assessment Order dated 20th April, 2021 passed under Section 143 (3) read with Section 144 B of the Income Tax Act, 1961 (the Act) together with Notice of Demand under Section 156 of the Act and Show Cause Notice under Section 274 read with Section 270, 271 AAC of the Act both dated 20th April 2021.

The ground primarily is that the order has been passed without following principles of natural justice in as much as reasonable time to file response to the Draft Assessment Order was not granted and even the response and documents filed earlier have not been considered in the Draft Assessment Order.

Petitioner has been filing response to various notices received under Section 142 (1) of the Act. However after 2 moths a notice dated 17th April, 2021 digitally singed at 14:43:37 IST on 17th April, 2021 calling upon petitioner to show cause as to why the assessment should not be completed as per the Draft Assessment Order.

This was the time when there was total lock-down in Maharashtra including Mumbai due to Covid pandemic. Petitioner, in effect having been granted only one working day time to respond, therefore filed a request on 19th April, 2021 (18th April, 2021 being Sunday) bringing to the notice of respondents, problem faced due to Covid 19 situation and sought a reasonable period of ten days to respond to the Show Cause Notice. The officer took 2 months to prepare Draft Assessment Order and gave a very unreasonably short period of less than 24 working hours to respond to the Draft Assessment Order.

Ignoring even this request for reasonable period of ten days, on 24th April, 2021 an Assessment Order digitally signed at 13:10:56 IST was passed followed with Notice of Demand under Section 156 of the Act and Notice of Penalty under Section 274 read with Section 271 A of the Act recomputing petitioner income by adding a sum of Rs.12,57,02,560/-
both also dated 24th April, 2021.

Therefore, the Assessing Officer has not even bothered to even look at the adjournment request dated 19th April, 2021. The Assessing Officer could have atleast given five days time to the assessee when he has taken almost two months to prepare a Draft Assessment Order.

Court Observation and Order

We are also shocked by the tenor of the affidavit in reply where petitioner is accused of bringing pressure on the
Assessing Officer where petitioner has sought a reasonable time of ten days.
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.

The petitioner has provided all the evidence digitally which was ignored and not acted upon. 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. Ordered accordingly.

we are satisfied that this 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. The Assessing Officer should have been aware of the consequence provided under sub-Section (9) of Section 144B of the Act, which renders the entire assessment non-est in case procedure provided in Section 144B is not complied with.

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 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. We, therefore, direct the Assessing Officer to pay a sum of Rs.25,000/- (Rupees Twenty Five Thousand Only) as
donation to PM Cares. This amount shall be paid by the concerned Assessing Officer from his/her personal account to PM Cares within 2 weeks.

The interesting part of the order is court direct the AO to pay the cost as donation to PM Cares Fund

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