The Madras High Court has recently set aside a faceless assessment order passed by the National Faceless Assessment Centre (NFAC), ruling in favor of a taxpayer who was denied a fair opportunity to respond. The judgment underscores the critical need for procedural fairness in faceless assessments under the Income Tax Act.
🔑 Key Takeaways from the Judgment
1. Lack of Proper Communication
The petitioner, an agriculturist, argued that he was unaware of the assessment proceedings as all notices were sent to his auditor’s email ID. This lack of direct communication deprived him of the chance to file a proper response.
2. Procedural Lapses in Faceless Assessment
The court observed serious lapses in the NFAC’s procedure. Tax officials failed to ensure that notices were duly served on the taxpayer, which amounted to a denial of natural justice.
3. Assessment Order Set Aside
Recognizing these lapses, the Madras High Court quashed the assessment order. The NFAC was directed to reassess the case after giving the petitioner a fair hearing and sufficient time to respond.
📌 Implications of the Ruling
✅ Strengthening Taxpayer Rights
This judgment reinforces that taxpayer rights cannot be compromised under the faceless assessment scheme. Proper service of notices and an opportunity to be heard are essential requirements of natural justice.
✅ Impact on Faceless Assessment Scheme
The faceless assessment scheme was introduced to ensure transparency and curb undue interactions between taxpayers and tax officers. However, the ruling highlights its operational challenges—particularly in ensuring timely and proper communication.
📝 Conclusion
The Madras High Court’s decision is a reminder that technology-driven tax administration must balance efficiency with fairness. Faceless assessments, though revolutionary, must adhere to principles of natural justice to gain taxpayers’ trust.
For taxpayers, this ruling is an assurance that courts will intervene wherever procedural lapses compromise their right to a fair hearing.