Facts of the Case

The petitioner, PCJ Securities Private Limited, filed a writ petition challenging the assessment order dated 30 March 2022 passed by the National Faceless Assessment Centre under Sections 147 read with Section 144B of the Income Tax Act, along with the consequential demand notice of the same date.

The petitioner contended that the assessment order contained incorrect facts and figures which did not pertain to it. Specifically, the depreciation amount recorded in the show cause notice and assessment order was inconsistent with what was actually claimed in the return of income. Additionally, the demand raised was alleged to have no nexus with the petitioner’s financials.

Further, it was pointed out that approval for the assessment had been granted by an authority lacking jurisdiction, thereby rendering the proceedings defective.

Issues Involved

  1. Whether an assessment order containing apparent factual errors can be sustained under the faceless assessment scheme.
  2. Whether lack of jurisdiction in granting approval vitiates the assessment proceedings.
  3. Whether demand notices based on incorrect data and unrelated figures are legally valid.
  4. Whether procedural safeguards under Section 144B were properly followed.

Petitioner’s Arguments

  • The petitioner never claimed depreciation of Rs. 13,42,354/- as alleged; instead, only Rs. 2,50,425/- was claimed.
  • The demand notice amounting to Rs. 2,32,08,308/- was erroneous and had no connection with the petitioner’s actual tax liability.
  • The facts and figures mentioned in the assessment order were entirely unrelated to the petitioner.
  • Approval by the Principal Commissioner, Shillong was without jurisdiction, as the petitioner was assessed in Delhi.

Respondent’s Arguments

  • The respondent-revenue fairly admitted that there were apparent errors on the face of the record.
  • It was submitted that the matter may be remanded to the Assessing Officer for fresh (de novo) assessment in accordance with law.

Court’s Findings / Order

  • The Delhi High Court observed that the assessment order contained glaring factual inaccuracies and did not pertain to the petitioner.
  • Considering the admitted errors and lack of nexus between facts and the petitioner, the Court quashed the impugned assessment order and demand notice dated 30 March 2022.
  • The Court permitted the revenue authorities to take further steps in accordance with law, if permissible.

Important Clarifications by the Court

  • The Court expressed concern that despite a detailed faceless assessment mechanism involving multiple units, such glaring mistakes occurred.
  • It clarified that faceless assessment does not imply absence of accountability.
  • Directions were issued to:
    • The Principal Chief Commissioner (PCIT), National Faceless Assessment Centre to exercise greater caution.
    • The Central Board of Direct Taxes (CBDT) to ensure that such errors do not recur.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:1725-DB/MMH04052022CW64152022_211935.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.