The faceless order says I filed no reply when I did, and my hearing request was ignored. Is it valid?
It was set aside. The final order reproduced the draft order word for word apart from one sentence, recorded that no response had been filed when two replies were on the record, and ignored the requests for adjournment and personal hearing — so it was held non est under s.144B(9) as it then stood. The Court warned that costs would be recovered from the Assessing Officer personally and entered in the service record if it recurred.
Decided by the High Court (Bombay High Court (K.R. Shriram and Amit B. Borkar, JJ.)) on 2021-10-11, reported as [2021] 131 taxmann.com 165 (Bom) / [2021] 283 Taxman 459 (Bom) / [2022] 441 ITR 467 (Bom); Writ Petition No. 1625 of 2021. It bears on section 144B, section 144B(9), section 144, section 156, section 274, section 270A of the Income Tax Act 1961, in Faceless Assessment & Appeals and Assessment & Scrutiny matters.
This is the case for putting the draft and the final order side by side: an identical text is itself evidence that nothing filed was considered. The statutory hook has since gone, so the same facts now have to be argued as a breach of natural justice and of the mandatory procedure in s.144B(1) rather than as automatic nullity.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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For assessment year 2018-19 the company received a show cause notice dated 22 April 2021, a Friday, asking why the assessment should not be completed as per the accompanying draft assessment order, with a response due by 23:59 on Saturday 24 April 2021; it was told it could ask for a personal hearing. On 23 April 2021 it replied that COVID-19 had made travel difficult and offices in Mumbai were generally closed, objected to the modification, asked for a personal hearing and sought 20 days. On 27 April 2021 it filed a further response giving the quantitative details the notice had asked for. Almost six weeks later, on 8 June 2021, the assessment order was passed under s.144, together with a notice of demand under s.156 and a show cause notice under s.274 read with s.270A for penalty. The order was an exact reproduction of the draft save for one added sentence, that the assessee had given no justification for not furnishing quantitative details in Form 3CD. In the affidavit in reply the department asserted that the noting records showed both replies had been taken on record and considered.
The assessment order dated 8 June 2021 and the consequential notices were set aside (para 8). The Court found that the order had been passed without application of mind, without considering the two replies of 23 and 27 April 2021 and without considering the request for a personal hearing (para 6), and that the order proceeded on the footing that no response at all had been filed, which was contrary to the record (para 7). It recorded that s.144B(9) as it then stood provided that an assessment not made in accordance with the procedure laid down in that section shall be non est, and that the order being non est the Assessing Officer might take such steps as advised in accordance with law — expressly making no observation on the merits (para 8). The relief was therefore quashing with the assessment left open to be redone, not a final decision on the assessee's liability. At para 9 the Court put the department on notice that if such orders continued it would impose substantial costs on the Assessing Officer personally, to be recovered from salary, and direct that such orders be placed in the officer's career records. Those observations in para 9 were stayed by the Supreme Court on 11 April 2022 and expunged by it on 21 March 2023, and no longer form part of the judgment.
The Court set the final assessment order beside the draft and found them identical but for a single added sentence, which it said itself showed that the order had been passed without application of mind and without considering either of the two replies or the request for a personal hearing (paras 5 and 6). It noted the department's affidavit asserting that the noting records showed both submissions had been taken on record and considered, observed that the assessment order did not reflect this, and said in terms that it wondered how the affiant knew something the assessment order did not reflect (para 6). It then compared the quantitative details filed on 27 April 2021 with the prescribed Form 35(b) and found no difference beyond the mention of the product manufactured, so that the order's premise that no response had been filed was contrary to the record (para 7). On that footing the order and the consequential notices were set aside, the Court adding that s.144B(9) then provided that an assessment not made in accordance with the section's procedure shall be non est, and leaving the Assessing Officer to take such steps as advised without any observation on the merits (para 8).
This itself shows that respondents have passed the assessment order without application of mind, without considering the two replies dated 23rd April 2021 and 27th April 2021 filed by petitioner and without considering the request for personal hearing also sought by petitioner.
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Handle my notice → Ask a CA on WhatsAppIt was set aside. The final order reproduced the draft order word for word apart from one sentence, recorded that no response had been filed when two replies were on the record, and ignored the requests for adjournment and personal hearing — so it was held non est under s.144B(9) as it then stood. The Court warned that costs would be recovered from the Assessing Officer personally and entered in the service record if it recurred. This was decided by the High Court (Bombay High Court (K.R. Shriram and Amit B. Borkar, JJ.)) and bears on section 144B, section 144B(9), section 144, section 156, section 274, section 270A of the Income Tax Act 1961. It is reported as [2021] 131 taxmann.com 165 (Bom) / [2021] 283 Taxman 459 (Bom) / [2022] 441 ITR 467 (Bom); Writ Petition No. 1625 of 2021. This is the case for putting the draft and the final order side by side: an identical text is itself evidence that nothing filed was considered. The statutory hook has since gone, so the same facts now have to be argued as a breach of natural justice and of the mandatory procedure in s.144B(1) rather than as automatic nullity. If it applies to you, the first step is this: Set the draft and final orders side by side and identify every sentence common to both, to demonstrate non-application of mind.
For assessment year 2018-19 the company received a show cause notice dated 22 April 2021, a Friday, asking why the assessment should not be completed as per the accompanying draft assessment order, with a response due by 23:59 on Saturday 24 April 2021; it was told it could ask for a personal hearing. On 23 April 2021 it replied that COVID-19 had made travel difficult and offices in Mumbai were generally closed, objected to the modification, asked for a personal hearing and sought 20 days. On 27 April 2021 it filed a further response giving the quantitative details the notice had asked for. Almost six weeks later, on 8 June 2021, the assessment order was passed under s.144, together with a notice of demand under s.156 and a show cause notice under s.274 read with s.270A for penalty. The order was an exact reproduction of the draft save for one added sentence, that the assessee had given no justification for not furnishing quantitative details in Form 3CD. In the affidavit in reply the department asserted that the noting records showed both replies had been taken on record and considered. The matter was decided on 2021-10-11 by the High Court (Bombay High Court (K.R. Shriram and Amit B. Borkar, JJ.)). On those facts the High Court held as follows. The assessment order dated 8 June 2021 and the consequential notices were set aside (para 8). The Court found that the order had been passed without application of mind, without considering the two replies of 23 and 27 April 2021 and without considering the request for a personal hearing (para 6), and that the order proceeded on the footing that no response at all had been filed, which was contrary to the record (para 7). It recorded that s.144B(9) as it then stood provided that an assessment not made in accordance with the procedure laid down in that section shall be non est, and that the order being non est the Assessing Officer might take such steps as advised in accordance with law — expressly making no observation on the merits (para 8). The relief was therefore quashing with the assessment left open to be redone, not a final decision on the assessee's liability. At para 9 the Court put the department on notice that if such orders continued it would impose substantial costs on the Assessing Officer personally, to be recovered from salary, and direct that such orders be placed in the officer's career records. Those observations in para 9 were stayed by the Supreme Court on 11 April 2022 and expunged by it on 21 March 2023, and no longer form part of the judgment.
The Court set the final assessment order beside the draft and found them identical but for a single added sentence, which it said itself showed that the order had been passed without application of mind and without considering either of the two replies or the request for a personal hearing (paras 5 and 6). It noted the department's affidavit asserting that the noting records showed both submissions had been taken on record and considered, observed that the assessment order did not reflect this, and said in terms that it wondered how the affiant knew something the assessment order did not reflect (para 6). It then compared the quantitative details filed on 27 April 2021 with the prescribed Form 35(b) and found no difference beyond the mention of the product manufactured, so that the order's premise that no response had been filed was contrary to the record (para 7). On that footing the order and the consequential notices were set aside, the Court adding that s.144B(9) then provided that an assessment not made in accordance with the section's procedure shall be non est, and leaving the Assessing Officer to take such steps as advised without any observation on the merits (para 8). In the words reproduced by the source cited on this page: "This itself shows that respondents have passed the assessment order without application of mind, without considering the two replies dated 23rd April 2021 and 27th April 2021 filed by petitioner and without considering the request for personal hearing also sought by petitioner."
It was decided by the High Court on 2021-10-11 and is reported as [2021] 131 taxmann.com 165 (Bom) / [2021] 283 Taxman 459 (Bom) / [2022] 441 ITR 467 (Bom); Writ Petition No. 1625 of 2021. 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, section 144B(9), section 144, section 156, section 274, section 270A, 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 assessment order dated 8 June 2021 and the consequential notices were set aside (para 8). The Court found that the order had been passed without application of mind, without considering the two replies of 23 and 27 April 2021 and without considering the request for a personal hearing (para 6), and that the order proceeded on the footing that no response at all had been filed, which was contrary to the record (para 7). It recorded that s.144B(9) as it then stood provided that an assessment not made in accordance with the procedure laid down in that section shall be non est, and that the order being non est the Assessing Officer might take such steps as advised in accordance with law — expressly making no observation on the merits (para 8). The relief was therefore quashing with the assessment left open to be redone, not a final decision on the assessee's liability. At para 9 the Court put the department on notice that if such orders continued it would impose substantial costs on the Assessing Officer personally, to be recovered from salary, and direct that such orders be placed in the officer's career records. Those observations in para 9 were stayed by the Supreme Court on 11 April 2022 and expunged by it on 21 March 2023, and no longer form part of the judgment. It arises in Faceless Assessment & Appeals and Assessment & Scrutiny matters, on section 144B, section 144B(9), section 144, section 156, section 274, section 270A of the Income Tax Act 1961, and was decided by Bombay High Court (K.R. Shriram and Amit B. Borkar, 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. Place the acknowledgement numbers and dates of every reply on record, so that a recital of 'no response received' is falsified on the file itself. Make the request for adjournment or personal hearing in writing and press it, because an ignored request is what carried this case. Frame the ground as a breach of natural justice and of the mandatory s.144B procedure, not as nullity under s.144B(9).
Superseded by amendment. The provision the order turned on no longer exists: s.144B(9), which made an assessment non est if the prescribed procedure was not followed, was omitted by the Finance Act 2022 with retrospective effect from 1 April 2021, the very commencement of the faceless regime. The Supreme Court has since dealt with the judgment twice. On 11 April 2022, in SLP(C) No. 4906 of 2022 ([2022] 137 taxmann.com 210 / 287 Taxman 219 (SC)), it issued notice and stayed the observations in para 9. On 21 March 2023, in Civil Appeal Nos. 1829 to 1831, 1936 and 1937 of 2023 ([2023] 148 taxmann.com 421 / 293 Taxman 296 / 453 ITR 239 (SC)), it granted leave, held the observations in para 9 unwarranted and ordered them expunged, and — because the omission of s.144B(9) had not been before the High Court — permitted the Revenue to file a review application before the High Court within six weeks, to be considered on merits and without any limitation objection. It expressly did not decide the merits either way. The database citator marks this decision 'Set aside [2023] 148 taxmann.com 421 (SC)'; in the text of that composite order the express setting aside and remittal attaches to the companion decision Chander Arjandas Manwani v. NFAC [2021] 130 taxmann.com 445 / 283 Taxman 380 / [2022] 442 ITR 197 (Bom), while what was done to Mantra was the expunging of para 9 plus liberty to seek review. Either way the judgment cannot now be relied on for automatic nullity. Plead the breach as a violation of natural justice and of the mandatory s.144B(1) procedure. 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.
Three things have to be said before this is cited. First, the provision it turned on is gone: s.144B(9), which made an assessment non est if the prescribed procedure was not followed, was omitted by the Finance Act 2022 with retrospective effect from 1 April 2021. Second, the Supreme Court has dealt with the judgment — it stayed the para 9 observations on 11 April 2022 and expunged them on 21 March 2023, and permitted the Revenue to seek review in the High Court on the omission of s.144B(9); the citator marks the decision as set aside by that order. The threat of personal costs on the Assessing Officer, which is what this case is popularly remembered for, is therefore no longer part of it. Third, even at the High Court the relief was to quash and leave the Assessing Officer free to take such steps as advised, with no observation on the merits (para 8). What survives usefully is the finding at paras 6 and 7. There is also an earlier Bombay High Court order in the same matter dated 3 July 2021; the operative judgment is that of 11 October 2021. Whether the Revenue in fact filed the review application the Supreme Court permitted, and what the Bombay High Court made of it, was not established. There is also an earlier Bombay High Court order in the same matter dated 3 July 2021, which was not read; the operative judgment used here is that of 11 October 2021. 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 assessment order dated 8 June 2021 and the consequential notices were set aside (para 8). The Court found that the order had been passed without application of mind, without considering the two replies of 23 and 27 April 2021 and without considering the request for a personal hearing (para 6), and that the order proceeded on the footing that no response at all had been filed, which was contrary to the record (para 7). It recorded that s.144B(9) as it then stood provided that an assessment not made in accordance with the procedure laid down in that section shall be non est, and that the order being non est the Assessing Officer might take such steps as advised in accordance with law — expressly making no observation on the merits (para 8). The relief was therefore quashing with the assessment left open to be redone, not a final decision on the assessee's liability. At para 9 the Court put the department on notice that if such orders continued it would impose substantial costs on the Assessing Officer personally, to be recovered from salary, and direct that such orders be placed in the officer's career records. Those observations in para 9 were stayed by the Supreme Court on 11 April 2022 and expunged by it on 21 March 2023, and no longer form part of the judgment.
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