The faceless order came without any show-cause notice or draft order. Will it just be annulled?
No — expect a remand. The Supreme Court accepted that making a variation without serving the show-cause notice and draft assessment order breached s.144B and the principles of natural justice, but held the High Court should have sent the matter back to the Assessing Officer for a fresh order rather than simply setting the assessment aside.
Decided by the Supreme Court (Supreme Court of India (M.R. Shah and C.T. Ravikumar, JJ.)) on 2023-03-21, reported as (2023) 331 CTR (SC) 717; Civil Appeal No. 1829 of 2023 (arising out of SLP (C) No. 1857 of 2023). It bears on section 144B, section 143(3) of the Income Tax Act 1961, in Faceless Assessment & Appeals and Assessment & Scrutiny matters.
This is the authority the department uses to turn an annulment into a fresh innings, and it is in the library for that reason. The mandatory character of the show-cause-notice-cum-draft-order requirement is untouched — the decision is about relief, not legality — but it tells you that a purely procedural win on s.144B usually buys a properly conducted assessment rather than the end of the matter. All contentions on the merits were left open.
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The Revenue passed a faceless assessment order without first issuing the mandatory show-cause notice accompanied by a draft assessment order. The assessee, Automotive Manufacturers Private Limited, challenged the order by writ petition on the ground of that procedural violation. The High Court accepted the challenge and interfered with the assessment order. The Revenue — the National Faceless Assessment Centre and others — appealed to the Supreme Court, contending that the appropriate course was to allow the assessment to be redone rather than to leave the Department without a remedy. The Faceless Assessment Scheme was of recent introduction at the relevant time.
The assessment order was passed in breach of section 144B and of the principles of natural justice, because the show-cause notice with the draft assessment order was not served. However, the High Court ought to have remanded the matter to the Assessing Officer to pass a fresh order in accordance with law rather than simply setting the order aside. The appeal was disposed of by remand, with all contentions on the merits left open.
The reported accounts of this order are that the assessment was made without service of the show-cause notice and draft assessment order required before a variation prejudicial to the assessee, that this was treated as a breach of natural justice, and that the Court's intervention went to relief rather than legality: instead of the assessment being set aside outright, the matter was to go back to the Assessing Officer to be redone in accordance with law, with all contentions on the merits left open. The Faceless Assessment Scheme was then of recent introduction. That account rests on secondary reports; the order has not been read against a primary text, and the fuller reasoning attributed to it in earlier versions of this entry is not sourced.
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Handle my notice → Ask a CA on WhatsAppNo — expect a remand. The Supreme Court accepted that making a variation without serving the show-cause notice and draft assessment order breached s.144B and the principles of natural justice, but held the High Court should have sent the matter back to the Assessing Officer for a fresh order rather than simply setting the assessment aside. This was decided by the Supreme Court (Supreme Court of India (M.R. Shah and C.T. Ravikumar, JJ.)) and bears on section 144B, section 143(3) of the Income Tax Act 1961. It is reported as (2023) 331 CTR (SC) 717; Civil Appeal No. 1829 of 2023 (arising out of SLP (C) No. 1857 of 2023). This is the authority the department uses to turn an annulment into a fresh innings, and it is in the library for that reason. The mandatory character of the show-cause-notice-cum-draft-order requirement is untouched — the decision is about relief, not legality — but it tells you that a purely procedural win on s.144B usually buys a properly conducted assessment rather than the end of the matter. All contentions on the merits were left open. If it applies to you, the first step is this: Plead the merits alongside the procedural breach so that a remand does not leave the additions unanswered.
The Revenue passed a faceless assessment order without first issuing the mandatory show-cause notice accompanied by a draft assessment order. The assessee, Automotive Manufacturers Private Limited, challenged the order by writ petition on the ground of that procedural violation. The High Court accepted the challenge and interfered with the assessment order. The Revenue — the National Faceless Assessment Centre and others — appealed to the Supreme Court, contending that the appropriate course was to allow the assessment to be redone rather than to leave the Department without a remedy. The Faceless Assessment Scheme was of recent introduction at the relevant time. The matter was decided on 2023-03-21 by the Supreme Court (Supreme Court of India (M.R. Shah and C.T. Ravikumar, JJ.)). On those facts the Supreme Court held as follows. The assessment order was passed in breach of section 144B and of the principles of natural justice, because the show-cause notice with the draft assessment order was not served. However, the High Court ought to have remanded the matter to the Assessing Officer to pass a fresh order in accordance with law rather than simply setting the order aside. The appeal was disposed of by remand, with all contentions on the merits left open.
The reported accounts of this order are that the assessment was made without service of the show-cause notice and draft assessment order required before a variation prejudicial to the assessee, that this was treated as a breach of natural justice, and that the Court's intervention went to relief rather than legality: instead of the assessment being set aside outright, the matter was to go back to the Assessing Officer to be redone in accordance with law, with all contentions on the merits left open. The Faceless Assessment Scheme was then of recent introduction. That account rests on secondary reports; the order has not been read against a primary text, and the fuller reasoning attributed to it in earlier versions of this entry is not sourced.
It was decided by the Supreme Court on 2023-03-21 and is reported as (2023) 331 CTR (SC) 717; Civil Appeal No. 1829 of 2023 (arising out of SLP (C) No. 1857 of 2023). Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 144B, section 143(3), 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 cuts both ways and is cited by both sides. The assessment order was passed in breach of section 144B and of the principles of natural justice, because the show-cause notice with the draft assessment order was not served. However, the High Court ought to have remanded the matter to the Assessing Officer to pass a fresh order in accordance with law rather than simply setting the order aside. The appeal was disposed of by remand, with all contentions on the merits left open. It arises in Faceless Assessment & Appeals and Assessment & Scrutiny matters, on section 144B, section 143(3) of the Income Tax Act 1961, and was decided by Supreme Court of India (M.R. Shah and C.T. Ravikumar, 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. On remand, use the fresh proceedings to file the reply and material that the missing show-cause notice and draft order denied you. Where a fresh assessment would itself prejudice you, say so when relief is being framed instead of assuming the order will be annulled outright.
Validity check could not be completed. The order itself could not be located as a document in a subscription database on five searches, so its terms have not been checked against a primary text; the citation (2023) 331 CTR (SC) 717 comes from later judgments that cite it. Two of its particulars are now confirmed from a source independent of the news reporting: the Delhi Bench of the Tribunal, in Haier Appliances India (P.) Ltd. v. ACIT [2024] 168 taxmann.com 126 (Delhi - Trib.), decided 20 September 2024, lists in its cases referred to 'National Faceless Assessment Centre v. Automotive Manufacturers (P.) Ltd. [Civil Appeal No. 1829 of 2023, dated 21-3-2023]'. That fixes the appeal number and the date of 21 March 2023, which previously rested on secondary reports alone. It is a citation in a list of authorities relied on at para 6 and not later treatment, and the Tribunal does not discuss the order. It has been distinguished by the Kerala High Court in Noel Villas and Apartments v. Assistant Commissioner of Income-tax [2026] 187 taxmann.com 911 (Ker), 8 June 2026, whose case review lists it among decisions distinguished at para 14. The ground of distinction matters: that Court held, following a Division Bench in Joint CIT v. Sujatha Revikumar (WA No. 2156 of 2024, 27 March 2025), that s.144B requires a draft assessment order to be served only on an 'eligible assessee' as defined in s.144C(15)(b), and that for an ordinary assessee the draft order is merely an internal document, a show-cause notice setting out the proposed variations being enough. It observed that the decisions relied on, including this one, did not discuss that distinction. No decision applying, following or affirming this order was found, so it stays unverified. 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 order could not be located in a subscription database, so what this entry says the Court held remains derived from secondary reports and has not been checked against the order itself. Five searches have now been run. Two particulars are no longer second-hand: the Delhi Bench of the Tribunal, in Haier Appliances India (P.) Ltd. v. ACIT [2024] 168 taxmann.com 126 (Delhi - Trib.), 20 September 2024, cites the decision as 'National Faceless Assessment Centre v. Automotive Manufacturers (P.) Ltd. [Civil Appeal No. 1829 of 2023, dated 21-3-2023]', which confirms the appeal number and the date. The Bench, the High Court whose order was under appeal, the assessment year and the operative wording remain unknown, and there is no verified quotation. Read what this entry records as the holding for what it is - a remand. On the reporting relied on, the Court did not hold the assessment good; it held that the High Court should have sent the matter back to the Assessing Officer to be redone rather than setting the order aside outright, with all contentions on the merits left open. Do not cite it as deciding anything on the merits of the assessment. One substantive warning on the law: the entry's statement that s.144B always requires a show-cause notice accompanied by a draft assessment order is contested. The Kerala High Court, in Noel Villas and Apartments v. ACIT [2026] 187 taxmann.com 911 (Ker), following its own Division Bench in Joint CIT v. Sujatha Revikumar, has held that the draft assessment order need be served only on an 'eligible assessee' within s.144C(15)(b) - broadly, transfer pricing cases and non-resident assessees - and that for an ordinary assessee a show-cause notice setting out the proposed variations satisfies the section, the draft order being an internal document. That Court distinguished this decision on the footing that it did not discuss the distinction. The order itself is not carried as a document in the subscription database searched: the searches run were 'Automotive Manufacturers', 'Automotive Manufactures', 'Automotive Manufacturers Faceless', '331 CTR 717' and 'National Faceless Assessment Centre Automotive Manufacturers', and the decision surfaces only as a case cited within other judgments. The appeal number and the date of 21 March 2023 are now confirmed from a later Tribunal's list of authorities, but the Bench, the High Court whose order was under appeal, the assessment year and the operative wording remain unestablished, there is no verified quotation, and the reported holding has not been checked against a primary text. 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 was passed in breach of section 144B and of the principles of natural justice, because the show-cause notice with the draft assessment order was not served. However, the High Court ought to have remanded the matter to the Assessing Officer to pass a fresh order in accordance with law rather than simply setting the order aside. The appeal was disposed of by remand, with all contentions on the merits left open.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
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