Can a faceless order stand if the mandatory procedure was skipped?
Reported as setting aside a faceless assessment where the statutory procedure and natural justice were not followed.
Decided by the High Court (Bombay High Court — Dhiraj Singh Thakur and Valmiki SA Menezes, JJ.) on 2022-12-08, reported as [2023] 153 taxmann.com 177 (Bom); Writ Petition (Lodging) No. 32925 of 2022; AY 2020-21. It bears on section 144B of the Income Tax Act 1961, in Assessment & Scrutiny matters.
Gives the Bombay jurisdiction line on the same point as Bharat Aluminium. Useful where the assessee is in Maharashtra.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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For assessment year 2020-21 the assessee challenged an assessment order of 18 September 2022 passed under s.143(3) read with s.144B. The show-cause notice under s.144B(6)(vii) was dated 13 September 2022, signed by the Assessing Officer at 6.44 p.m. and received at 6.50 p.m. that evening, and required a response by 11.00 a.m. on 15 September - less than two days. The assessee tried to upload a reply on 16 September but the portal had been closed; it registered a grievance on the official portal and uploaded its objections to the proposed variation with that grievance the same day. The assessment order followed on 18 September.
The petition was allowed and the matter remanded. The Court held that the time given to respond to the show-cause notice was quite inadequate and illusory and that the principles of natural justice had been violated. It set aside the assessment order of 18 September 2022 passed under s.143(3) read with s.144B for assessment year 2020-21, remanded the matter to the Assessing Officer to consider the objections to the show-cause notice, which the assessee was to file within two weeks and for which the system was to be enabled, and directed that the assessee be given an opportunity of being heard under s.144B(6)(vii) before fresh orders are passed in accordance with law. This is a remand on natural justice, not a final decision on the merits of the assessment.
The petitioner's case was that the show-cause notice under s.144B(6)(vii), signed at 6.44 p.m. on 13 September 2022 and received at 6.50 p.m. the same evening, required a response by 11.00 a.m. on 15 September - less than two days - that its attempt to upload a reply on 16 September failed because the portal had been closed, and that it then registered a grievance on the portal and uploaded its objections there the same day, before the assessment order was passed on 18 September (para 1). Counsel for the petitioner argued that the objections were on the respondents' system and could have been considered, and that the Assessing Officer had violated the mandate of the Circular of 3 August 2022, in particular clause N.1.3.1, which prescribes a minimum of seven days in such cases (para 2). Counsel for the respondents answered that clause N.1.3.2 gives the Assessing Officer power to curtail the seven days in certain cases, having regard to the limitation date for completing the assessment (para 3). The Court did not resolve that dispute. Its only reason is at para 5: the time made available was quite inadequate and illusory, so the principles of natural justice were violated. It opened its order at para 6 with the words 'Be that as it may' before allowing the petition and remanding.
In our opinion, the time that was made available to the petitioner to file its response to the show cause notice was quite inadequate and illusory and therefore, the principles of natural justice can be said to have been violated in the case of the petitioner.
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Handle my notice → Ask a CA on WhatsAppReported as setting aside a faceless assessment where the statutory procedure and natural justice were not followed. This was decided by the High Court (Bombay High Court — Dhiraj Singh Thakur and Valmiki SA Menezes, JJ.) and bears on section 144B of the Income Tax Act 1961. It is reported as [2023] 153 taxmann.com 177 (Bom); Writ Petition (Lodging) No. 32925 of 2022; AY 2020-21. Gives the Bombay jurisdiction line on the same point as Bharat Aluminium. Useful where the assessee is in Maharashtra. If it applies to you, the first step is this: Check whether a draft assessment order and show cause were in fact issued before the variation.
For assessment year 2020-21 the assessee challenged an assessment order of 18 September 2022 passed under s.143(3) read with s.144B. The show-cause notice under s.144B(6)(vii) was dated 13 September 2022, signed by the Assessing Officer at 6.44 p.m. and received at 6.50 p.m. that evening, and required a response by 11.00 a.m. on 15 September - less than two days. The assessee tried to upload a reply on 16 September but the portal had been closed; it registered a grievance on the official portal and uploaded its objections to the proposed variation with that grievance the same day. The assessment order followed on 18 September. The matter was decided on 2022-12-08 by the High Court (Bombay High Court — Dhiraj Singh Thakur and Valmiki SA Menezes, JJ.). On those facts the High Court held as follows. The petition was allowed and the matter remanded. The Court held that the time given to respond to the show-cause notice was quite inadequate and illusory and that the principles of natural justice had been violated. It set aside the assessment order of 18 September 2022 passed under s.143(3) read with s.144B for assessment year 2020-21, remanded the matter to the Assessing Officer to consider the objections to the show-cause notice, which the assessee was to file within two weeks and for which the system was to be enabled, and directed that the assessee be given an opportunity of being heard under s.144B(6)(vii) before fresh orders are passed in accordance with law. This is a remand on natural justice, not a final decision on the merits of the assessment.
The petitioner's case was that the show-cause notice under s.144B(6)(vii), signed at 6.44 p.m. on 13 September 2022 and received at 6.50 p.m. the same evening, required a response by 11.00 a.m. on 15 September - less than two days - that its attempt to upload a reply on 16 September failed because the portal had been closed, and that it then registered a grievance on the portal and uploaded its objections there the same day, before the assessment order was passed on 18 September (para 1). Counsel for the petitioner argued that the objections were on the respondents' system and could have been considered, and that the Assessing Officer had violated the mandate of the Circular of 3 August 2022, in particular clause N.1.3.1, which prescribes a minimum of seven days in such cases (para 2). Counsel for the respondents answered that clause N.1.3.2 gives the Assessing Officer power to curtail the seven days in certain cases, having regard to the limitation date for completing the assessment (para 3). The Court did not resolve that dispute. Its only reason is at para 5: the time made available was quite inadequate and illusory, so the principles of natural justice were violated. It opened its order at para 6 with the words 'Be that as it may' before allowing the petition and remanding. In the words reproduced by the source cited on this page: "In our opinion, the time that was made available to the petitioner to file its response to the show cause notice was quite inadequate and illusory and therefore, the principles of natural justice can be said to have been violated in the case of the petitioner."
It was decided by the High Court on 2022-12-08 and is reported as [2023] 153 taxmann.com 177 (Bom); Writ Petition (Lodging) No. 32925 of 2022; AY 2020-21. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 144B, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The petition was allowed and the matter remanded. The Court held that the time given to respond to the show-cause notice was quite inadequate and illusory and that the principles of natural justice had been violated. It set aside the assessment order of 18 September 2022 passed under s.143(3) read with s.144B for assessment year 2020-21, remanded the matter to the Assessing Officer to consider the objections to the show-cause notice, which the assessee was to file within two weeks and for which the system was to be enabled, and directed that the assessee be given an opportunity of being heard under s.144B(6)(vii) before fresh orders are passed in accordance with law. This is a remand on natural justice, not a final decision on the merits of the assessment. It arises in Assessment & Scrutiny matters, on section 144B of the Income Tax Act 1961, and was decided by Bombay High Court — Dhiraj Singh Thakur and Valmiki SA Menezes, JJ.. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Check whether the material relied on was supplied.
Searched for later treatment; none was found. That is not the same as a source affirming it. No later decision applying, following or affirming this judgment was established; the report carries no citator banner and no note of a special leave petition. Caution is needed about what the case can be cited for. The seven-day minimum in clause N.1.3.1 of the Circular of 3 August 2022 was argued by the petitioner and met by the Revenue with clause N.1.3.2, which allows curtailment; the Court did not decide between them and rested its order on natural justice alone (paras 2, 3 and 5). It is therefore authority that a notice giving less than two days is inadequate on these facts, not authority that seven days is mandatory. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The particulars are settled from the report: Bombay High Court, Dhiraj Singh Thakur and Valmiki SA Menezes, JJ., Writ Petition (Lodging) No. 32925 of 2022, decided 8 December 2022, assessment year 2020-21, reported at [2023] 153 taxmann.com 177. Two corrections matter for use. The outcome is a remand: the assessment order was set aside and the matter sent back to the Assessing Officer to consider objections to be filed within two weeks, with a hearing under s.144B(6)(vii) - the assessee did not win on the merits. And the seven-day point is not the ratio. The petitioner argued clause N.1.3.1 of the Circular of 3 August 2022; the Revenue answered with clause N.1.3.2, which permits curtailment where the limitation date requires it; and the Court declined to resolve it, saying 'Be that as it may' and deciding on natural justice alone. What the case supports is that a show-cause notice served at 6.50 p.m. and returnable at 11.00 a.m. the day after next is inadequate and illusory. Record the exact timestamps, and if you want the seven-day rule as such, cite the circular and a decision that actually construes it. The Court left undecided whether clause N.1.3.2 of the Circular of 3 August 2022 permits the seven-day minimum to be curtailed; that question needs a decision that construes the circular. Later treatment of this judgment was not established. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The petition was allowed and the matter remanded. The Court held that the time given to respond to the show-cause notice was quite inadequate and illusory and that the principles of natural justice had been violated. It set aside the assessment order of 18 September 2022 passed under s.143(3) read with s.144B for assessment year 2020-21, remanded the matter to the Assessing Officer to consider the objections to the show-cause notice, which the assessee was to file within two weeks and for which the system was to be enabled, and directed that the assessee be given an opportunity of being heard under s.144B(6)(vii) before fresh orders are passed in accordance with law. This is a remand on natural justice, not a final decision on the merits of the assessment.
TaxSphere, “CS & Sons v NFAC”, https://taxnotice.vittsphere.com/caselaw/case/cs-sons-v-nfac/ (validity last checked 2026-08-19)
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