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In a plea challenging the vires of the Section 144(B) of the Income Tax Act, 1961 Madras High Court today issued notice. The plea had alleged that the procedure adopted by the faceless assessment centre is violative of Article 14 of Indian Constitution.

The matter appeared before the division bench comprising Chief Justice Sanjib Banerjee and Justice PD Audikesavalu. The bench directed the matter to be listed after 3 weeks stating that a copy of the petition should reach the office of the Attorney General. 

Section 144(B) was inserted in the IT Act, 1961 in the year 2020 making provision for faceless e-assessment with a view to eliminate the human interface between the taxpayer and the income tax department.

The petitioner in his plea had, however, contended that the procedure followed by the National Assessment Center is completely opaque and the assessee has no clue as to what happenes behind the scenes.

He had averred that as per subsection 1 clause 16 of Section 144(B), once the National Assessment Center gets a draft assessment order as prepared by the specific assessment unit in any one Regional Faceless Assessment Centre, it has two options – one by way of a risk management strategy assign the assessment to review agent or alternately it can send that draft to the assessee calling him for the objections.

The petitioner had contended that adoption of this first procedure to the alternative procedure is violative of 14 because they are treating all classes of assesses in two different parameters without any reasonable classification.

He had further alleged that apart from that, there is nothing in the public domain as to what is this risk management strategy that is specified by the Central Board of Direct Taxation or how the center is going to allocate the assessment to a review in it or how are they going to allocate the assessment to the same assessment unit.

He had challenged the authority of the Center stating that such very distinction in how the draft assessment order would be treated by the National Assessment Center amounts to a process of adjudication or assessment which the authority of the centre does not possed.

Therefore, taking note of petitioner's contentions, court issued notice. 

Furthermore, the petitioner had also sought a stay on an assessment order dated September 9, 2021, demanding from him Rs. 49 crores alleging that he had suffered an assessment which was bereft of reasons and the order did not indicate why he was held liable to pay the addition quantum. 

To this, court directed the department to restrain from recovering such amount till the matter appears next adding that on the returnable date the court will also considered whether the stay on such recovery should continue further or not.

In the Union Budget 2019, the Finance Minister proposed the introduction of a scheme of faceless e-assessment. The scheme lais down the procedure to carry out a faceless assessment through electronic mode amending the e-assessment scheme of 2019 from 13 August 2020.

For executing such scheme, section 144B was inserted after section 144A of the IT Act, 1961 by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 with effect from April 1, 2021. 

Case Title: M/S.Navitas LLP Vs Union of India And 3 Others