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The Madras High Court in the case having WP(C)24032/2021 has quashed the assessment proceedings initiated in violation as prescribed u/s 144B. The bench has observed that a duty is cast on the AO in terms of Section 144B(1)(xiv) to take into account all relevant material frames the draft assessment order wherein the respondent has erred in not complying with the mandatory requirement since the draft assessment order has been made without even examining/taking into account the objections/response of the petitioner made vide letter dated 22.09.2021and herein the draft assessment order suffers from non-application of mind to relevant matters and on record, thus stands vitiated.

The brief facts pertaining to this case are:

• The assessee company engaged in the manufacture, production, and sale of animal feed, aquatic feed, and aquatic health care products wherein filed its return declaring “Nil” income after set-off of brought forward losses.
• Subsequently, the ITO issued an SCN to make additions for invoking penalty u/s 270A wherein the assessee filed its reply along with supporting evidence and passed the assessment order u/s 143(3).
• The bench has found that the intimation by the NFaC u/s 144B(1)(iii) has not been furnished as the method and manner adopted in making the assessment is now a complete faceless assessment which was launched in 2020 to promote an efficient and effective tax administration, minimize physical interface & increasing accountability.
• The Bench opined that intimation u/s.144B(1)(iii) informs an assessee that the assessment would be made in terms of Sec.144B which is important if one bears in mind that Faceless Assessments u/s.144B comes with its own set of obligations and rights in making the assessment.
• On this the order was passed without considering objections filed by the assessee, the Bench pointed out that such an assessment order traverses beyond the draft assessment order and hereby prejudice to the assessee.
• Decision: The court on this basis decided that the draft assessment order suffers from non-application of mind and thereby sets aside impugned proceedings and directed the revenue to follow the procedure contemplated u/s.144B.(In the favour of the assessee).