SOP should be followed in Faceless Assessment: Calcutta HC quashes Assessment Order holding as Classic Example as to how Assessment should not be Made

The Calcutta High Court quashed an assessment order holding as classic example as to how assessment should not be made and observed that Standard Operating Procedure (SOP) should be followed in faceless assessment.

The appellant, Indu Goenka, has challenged the assessment order under Section 143(3) read with Section 144B of the Income Tax Act, 1961 (Act) on the ground that it is in total violation of the principles of natural justice and it has ignored all the formalities to be observed as enumerated under the Standard Operating Procedure for faceless assessment orders.

The Single Bench had dismissed the writ petition on the ground that the reasoning given by the assessing officer cannot be examined in a writ proceeding as the Court cannot act as an appellate authority. Questioning the correctness of the order, the appellant is before the Court by way of an intra-Court appeal.

The Standard Operating Procedure (SOP) under the Faceless Assessment framed under Section 144B of the Act had been issued by the National Faceless Assessment Centre, Delhi and communicated to all the Principal Chief Commissioners, Income Tax under the cover of a letter dated 3rd August, 2022.

The procedure enumerates as to how the assessment has to be made and that the authority should ensure adherence to the principles of natural justice and reasonable opportunity to the assessee, timelines to be given for obtaining response to the show cause notice which have also been stipulated. Further, the SOP also gives the format of final assessment order in AU-9 which sets out the various heads under which the assessment order has to be passed with due discussion.

The Court of Justices T. S. Sivagnanam and Hiranmay Bhattacharyya noted that “On a cursory perusal of the assessment order, one gets an impression that it is in compliance with the SOP as it contains requisite sub-headings but however, on a closure reading of the assessment order it is found that the assessing officer has acted in a most perverse manner in passing the assessment order.”

The Court further went on to observe that the impugned assessment order is a classic example as to how an assessment should not be made. The assessing officer has reduced the procedure to an empty formality, which has to be deprecated.

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