Facts of the Case

The present writ petition was filed by the Petitioner challenging the assessment order dated 06th April 2021 along with the notice of demand for the Assessment Year 2018–19. The Petitioner also sought a stay on the operation of the impugned assessment order and consequential penalty proceedings.

The assessment order had been passed under Section 143(3) read with Sections 143(3A) and 143(3B) of the Income Tax Act, 1961.

Issues Involved

  1. Whether an assessment order passed under Sections 143(3A) and 143(3B) after 01 April 2021 is valid in law?
  2. Whether failure to follow the mandatory procedure under Section 144B (Faceless Assessment) renders the assessment order invalid?
  3. Whether non-service of draft assessment order and prior notice violates principles of natural justice?

Petitioner’s Arguments

  • The impugned assessment order is void ab initio, as Sections 143(3A) and 143(3B) ceased to exist after 01 April 2021 in view of Section 143(3D).
  • The Respondent failed to comply with the mandatory provisions of Section 144B, particularly:
    • No prior notice was served
    • No draft assessment order was provided
  • The assessment order was without jurisdiction and non-est in law.

Respondent’s Arguments

  • No prior notice or draft assessment order was required as all relevant documents were already available on record.

Court’s Findings / Order

  • After 01 April 2021, assessment orders must strictly comply with Section 144B (Faceless Assessment Scheme).
  • In view of Section 143(3D), provisions of Sections 143(3A) and 143(3B) were no longer applicable.
  • The Court relied on the precedent:
    Gurgaon Realtech Limited vs National Faceless Assessment Centre (W.P.(C) 5849/2021), holding similar assessment orders invalid.
  • There was a clear violation of Section 144B(1)(xvi) due to:
    • Non-service of draft assessment order
    • No opportunity of hearing
  • As per Section 144B(9), any assessment not made in accordance with the prescribed procedure shall be non est in law.

Final Order:

  • The Court set aside:
    • Assessment Order dated 06.04.2021
    • Demand Notice under Section 156
    • Penalty proceedings under Section 274 read with Section 270A
  • Liberty was granted to the Revenue to initiate fresh assessment proceedings strictly under Section 144B.

Important Clarification

  • Compliance with Faceless Assessment Scheme under Section 144B is mandatory, not procedural.
  • Any deviation renders the entire assessment void and non-est.
  • Post 01 April 2021, assessments cannot be framed under Sections 143(3A) & 143(3B).

Sections Involved

  • Section 143(3) – Assessment
  • Section 143(3A), 143(3B), 143(3D) – Faceless Assessment provisions
  • Section 144B – Faceless Assessment Procedure
  • Section 156 – Demand Notice
  • Section 270A – Penalty for under-reporting
  • Section 274 – Penalty proceedings

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2021:DHC:2103-DB/MMH19072021CW66622021_231934.pdf


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