The faceless order made additions but no show cause notice or draft order ever came. What is the order worth?
Nothing. Where the final order varies the returned income to the assessee's prejudice and no show cause notice or draft assessment order was served, the assessment is not made in accordance with s.144B and is non est. The Bombay High Court quashed it outright.
Decided by the High Court (K.R. Shriram J and R.I. Chagla J) on 2021-09-14, reported as Writ Petition No. 1083 of 2021 (Bombay High Court); (2021) 283 Taxman 558 / (2022) 19 ITR-OL 203 (Bom.). It bears on section 144B, section 143(3), section 142(1), section 156 of the Income Tax Act 1961, in Faceless Assessment & Appeals and Assessment & Scrutiny matters.
This is the cleanest Bombay authority for the proposition that a missing show cause notice cum draft assessment order is not a curable irregularity but destroys the order. It is also a useful record of what a real reply window looks like: a notice on 9 April requiring compliance by the evening of 13 April, across a second Saturday, a Sunday and a public holiday, was treated as no opportunity at all.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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For assessment year 2018-19 the petitioner received a notice dated 10 January 2020 and responded on 16 January and 11 February 2020. On 15 October 2020 it was told the case would be dealt with under the Faceless Assessment Scheme, 2019. A notice under s.142(1) dated 16 December 2020 called for further details, followed by reminders answered up to March 2021. On 9 April 2021 a further notice required details of unsecured loans by 6:54 p.m. on 13 April 2021; 10 April was a second Saturday, 11 April a Sunday and 13 April a public holiday, so the assessee effectively had one working day. The petitioner filed a partial response on 13 April 2021 asking for more time in view of the short notice and the Covid-19 situation, and filed further details on 17 April 2021. On 18 April 2021 the assessment order was passed determining total income at about Rs. 62.18 crore with a demand of about Rs. 63.35 crore, containing additions and disallowances. No show cause notice and no draft assessment order had been served.
The assessment order dated 18 April 2021 and the consequential notice of demand were quashed and set aside, the Court adding that the respondents "may take such denovo proceedings as required in accordance with law", with no order as to costs (para 16). Because the final order made variations prejudicial to the assessee without a show cause notice or draft assessment order, it was not made in accordance with the procedure laid down in s.144B and was non est (para 16).
The Court described s.144B as a provision in which the principle of natural justice has for the first time been embodied in the legislation itself, the scheme being aimed at greater efficiency, transparency and accountability (para 12). Reading s.144B, an assessee must be given an opportunity where the variation proposed in the draft assessment order is prejudicial to his interest, by service of a show cause notice calling upon him to show cause why the proposed variation should not be made, and the same requirement attaches to a revised draft assessment order containing a prejudicial variation; sub-section (9) provides that an assessment not made in accordance with the procedure shall be non est (para 13). On the facts, the notice of 9 April 2021 gave until 6:54 p.m. on 13 April 2021, the petitioner responded on 13 April with partial details and a request for time, filed further submissions on 17 April, and the order followed on 18 April without granting the opportunities provided in s.144B (para 14). The petition had squarely pleaded the absence of a show cause notice and the Department's affidavit was silent on it, asserting only that ample opportunity had been given (para 15). Since the order did contain additions and disallowances, the conclusion followed that it was non est. Para 16 pegs the failure to a named sub-clause: the final assessment order was "not made in accordance with the procedure laid down under Section 144B (xvi)(b) of the Act", because despite the variation being prejudicial to the interest of the assessee no opportunity had been given by service of a show cause notice and draft assessment order calling upon him to show cause why the proposed variation should not be made (para 16).
the impugned assessment order dated 18th April, 2021 is non est
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Handle my notice → Ask a CA on WhatsAppNothing. Where the final order varies the returned income to the assessee's prejudice and no show cause notice or draft assessment order was served, the assessment is not made in accordance with s.144B and is non est. The Bombay High Court quashed it outright. This was decided by the High Court (K.R. Shriram J and R.I. Chagla J) and bears on section 144B, section 143(3), section 142(1), section 156 of the Income Tax Act 1961. It is reported as Writ Petition No. 1083 of 2021 (Bombay High Court); (2021) 283 Taxman 558 / (2022) 19 ITR-OL 203 (Bom.). This is the cleanest Bombay authority for the proposition that a missing show cause notice cum draft assessment order is not a curable irregularity but destroys the order. It is also a useful record of what a real reply window looks like: a notice on 9 April requiring compliance by the evening of 13 April, across a second Saturday, a Sunday and a public holiday, was treated as no opportunity at all. If it applies to you, the first step is this: Download the full e-proceedings record and confirm whether anything described as a show cause notice cum draft assessment order was ever uploaded; the absence is the whole case.
For assessment year 2018-19 the petitioner received a notice dated 10 January 2020 and responded on 16 January and 11 February 2020. On 15 October 2020 it was told the case would be dealt with under the Faceless Assessment Scheme, 2019. A notice under s.142(1) dated 16 December 2020 called for further details, followed by reminders answered up to March 2021. On 9 April 2021 a further notice required details of unsecured loans by 6:54 p.m. on 13 April 2021; 10 April was a second Saturday, 11 April a Sunday and 13 April a public holiday, so the assessee effectively had one working day. The petitioner filed a partial response on 13 April 2021 asking for more time in view of the short notice and the Covid-19 situation, and filed further details on 17 April 2021. On 18 April 2021 the assessment order was passed determining total income at about Rs. 62.18 crore with a demand of about Rs. 63.35 crore, containing additions and disallowances. No show cause notice and no draft assessment order had been served. The matter was decided on 2021-09-14 by the High Court (K.R. Shriram J and R.I. Chagla J). On those facts the High Court held as follows. The assessment order dated 18 April 2021 and the consequential notice of demand were quashed and set aside, the Court adding that the respondents "may take such denovo proceedings as required in accordance with law", with no order as to costs (para 16). Because the final order made variations prejudicial to the assessee without a show cause notice or draft assessment order, it was not made in accordance with the procedure laid down in s.144B and was non est (para 16).
The Court described s.144B as a provision in which the principle of natural justice has for the first time been embodied in the legislation itself, the scheme being aimed at greater efficiency, transparency and accountability (para 12). Reading s.144B, an assessee must be given an opportunity where the variation proposed in the draft assessment order is prejudicial to his interest, by service of a show cause notice calling upon him to show cause why the proposed variation should not be made, and the same requirement attaches to a revised draft assessment order containing a prejudicial variation; sub-section (9) provides that an assessment not made in accordance with the procedure shall be non est (para 13). On the facts, the notice of 9 April 2021 gave until 6:54 p.m. on 13 April 2021, the petitioner responded on 13 April with partial details and a request for time, filed further submissions on 17 April, and the order followed on 18 April without granting the opportunities provided in s.144B (para 14). The petition had squarely pleaded the absence of a show cause notice and the Department's affidavit was silent on it, asserting only that ample opportunity had been given (para 15). Since the order did contain additions and disallowances, the conclusion followed that it was non est. Para 16 pegs the failure to a named sub-clause: the final assessment order was "not made in accordance with the procedure laid down under Section 144B (xvi)(b) of the Act", because despite the variation being prejudicial to the interest of the assessee no opportunity had been given by service of a show cause notice and draft assessment order calling upon him to show cause why the proposed variation should not be made (para 16). In the words reproduced by the source cited on this page: "the impugned assessment order dated 18th April, 2021 is non est"
It was decided by the High Court on 2021-09-14 and is reported as Writ Petition No. 1083 of 2021 (Bombay High Court); (2021) 283 Taxman 558 / (2022) 19 ITR-OL 203 (Bom.). 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 143(3), section 142(1), section 156, 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 18 April 2021 and the consequential notice of demand were quashed and set aside, the Court adding that the respondents "may take such denovo proceedings as required in accordance with law", with no order as to costs (para 16). Because the final order made variations prejudicial to the assessee without a show cause notice or draft assessment order, it was not made in accordance with the procedure laid down in s.144B and was non est (para 16). It arises in Faceless Assessment & Appeals and Assessment & Scrutiny matters, on section 144B, section 143(3), section 142(1), section 156 of the Income Tax Act 1961, and was decided by K.R. Shriram J and R.I. Chagla J. 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. Set out the dates in a table - notice date, time given, holidays falling inside the window, date of your reply, date of the order - as the Court did at para 14. Say plainly in the petition that the order is non est under s.144B, not merely irregular. Note that the Department's affidavit in this case was silent on the missing notice and simply asserted that ample opportunity was given; a bare assertion of that kind did not answer the point.
Superseded by amendment. The Revenue's SLP was dismissed: ACIT v. Trendsutra Client Services P. Ltd. (2023) 453 ITR 219 (SC). This is corroborated by two independent sources - the itatonline digest, and the Mumbai Bench of the Tribunal in Sahyadri Erectors Pvt Ltd v National e-Assessment Centre (ITA No. 4396/MUM/2023, 12 March 2026), which at para 8.2 records the dismissal and reproduces the Supreme Court's observation that "in para 16(b), the High Court itself has reserved the liberty in favour of the Revenue to take such de novo proceedings as required in accordance with law". The dismissal therefore rested on the liberty this Court had itself already reserved at para 16(b), and is not an approval of anything wider; a digest shorthand that the SLP was "dismissed with liberty to proceed in accordance with law" is a loose paraphrase of that order. The Supreme Court's own order was not retrieved and the SLP number is given inconsistently across sources, so no SLP number is recorded here. No later decision doubting this judgment was searched for or found. Caution for readers, and it is a serious one: paragraphs 13 and 16, on which the non est conclusion rests, turn on s.144B(9). That sub-section was omitted by the Finance Act, 2022 with RETROSPECTIVE effect from 1 April 2021 - the annotation to s.144B on incometaxindia.gov.in reads "Omitted by the Finance Act, 2022, w.r.e.f. 1-4-2021". The omission reaches back over the period of this very assessment, which was made on 18 April 2021, and it was enacted to undo this line of High Court authority; the Revenue has taken the point in later litigation. Put plainly: the sub-section the Court applied has been removed from the statute for the very period it was applied to, so the "non est" conclusion cannot simply be transplanted to a current matter, and paragraph 16 should not be cited for automatic nullity without saying so. This judgment was not itself set aside - the Revenue's SLP against it was dismissed - and what survives independently of sub-section (9) is the natural-justice reasoning in paragraphs 12 to 15 and the finding in paragraph 16 that the procedure under s.144B(xvi)(b) was not followed. 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 assessment order dated 18 April 2021 and the consequential notice of demand were quashed and set aside, the Court adding that the respondents "may take such denovo proceedings as required in accordance with law", with no order as to costs (para 16). Because the final order made variations prejudicial to the assessee without a show cause notice or draft assessment order, it was not made in accordance with the procedure laid down in s.144B and was non est (para 16).
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