Re-Assessment Notice Issued To Wrong Assessee: Delhi High Court Directs National Faceless Assessment Centre To Be More Cautious

The Delhi High Court has directed the Principal Commissioner of Income Tax of National Faceless Assessment Centre (NFAC) be more cautious while passing the Assessment Orders.

A division bench comprising of Justice Manmohan and Justice Dinesh Kumar Sharma also directed Central Board of Direct Taxes (CBDT) to ensure that any glaring mistakes do not occur in the future.

The Court was dealing with a plea challenging the assessment order dated 30th March, 2022 passed by National Faceless Assessment Center, Delhi under sec. 147 read with sec. 144B of the Income Tax Act, 1961 and demand notice dated 30th March, 2022.

The counsel for the petitioner had stated that the facts and figures mentioned in the impugned assessment order dated 30th March, 2022 did not pertain to the petitioner.

It was also emphasised that the petitioner never claimed depreciation of Rs.13,42,354 in its return of income tax as mentioned in the Show Cause Notice and in the Assessment Order. It was added that only a depreciation of Rs.2,50,425 was claimed by the petitioner.

Furthermore, it was submitted that the demand raised vide demand notice dated 30th March, 2022 of Rs.2,32,08,308 was patently incorrect and has no nexus with the addition made. It was argued that the petitioner was assessed at Delhi whereas the Show Cause Notice dated 29th March, 2022 and the Assessment Order dated 30th March, 2022 mentioned that Principal Commissioner, Shillong, despite having no jurisdiction, had accorded approval.

On the other hand, the counsel for the respondent revenue admitted that there were errors apparent on the face of the record and that the matter be remanded back to the Assessing Officer for de novo assessment in accordance with law.

"Keeping in view the aforesaid concession as well as the fact that the facts and figures mentioned in the impugned order do not pertain to the petitioner, the present matter is allowed and the impugned Assessment Order as well as demand notice dated 30th March, 2022 are quashed," the Court directed.

The Court expressed its surprise on the fact that despite an elaborate mechanism of checks and balances and multiple authorities like (assessment units, verification units, technical units, review units, Regional Faceless Assessment Centres and National Faceless Assessment Centre) being set up under sec. 144B of the Act, such glaring mistakes can happen.

"This Court is also of the view that faceless assessment does not mean that no responsibility can be fixed for passing such an erroneous order," the Court said.

Accordingly, it said:

"The PCIT, National Faceless Assessment Centre is directed to be more cautious while passing the Assessment Orders and the CBDT is directed to ensure that such glaring mistakes do not occur in the future."

Case Title: PCJ SECURITIES PRIVATE LIMITED v. INCOME TAX OFFICER, WARD 19(1) DELHI & ORS

Citation: 2022 LiveLaw (Del) 418

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