The court, however, said electronic-assessment — introduced to curb cases of corruption and harassment of tax payers by officials— was a laudable initiative.
The HC made the observations while hearing a writ petition filed by a Coimbatore-based chit fund company against certain additions made by the assessing officer, over cash deposits of Rs 67.37 lakh made by the company during the demonetisation period.
The judge remarked that the assessing officer should have at least called for an explanation in writing before concluding that the amount collected and deposited by the petitioner was unusual.
The judge opined that the assessment proceeding under the changed scenario would require determination of facts by proper exchange and flow of correspondence between the tax payer and the assessing officer. “Since the assessment proceedings no longer involve human interaction and is based on records alone, the assessment proceeding should have commenced much earlier so that before passing assessment order, the respondent assessing officer could have come to a definite conclusion on facts after fully understanding the nature of business of the petitioner,” states the order.
According to the tax department’s case, Salem Sree Ramavilas Chit Company was unable to explain the cash deposits. The petitioner contended that this was subscribers’ money which it could not deposit with banks before the announcement of demonetisation. It said this was explained in the details furnished on February 17, 2017, in compliance with the requirements of the Reserve Bank of India.
“In my view, the petitioner has prima facie demonstrated that the assessment proceeding has resulted in distorted conclusion on facts,” the high court said. It set aside the tax department’s order on the additions and asked the assessing officer to pass a fresh order within 60 days.
The finance ministry introduced the faceless assessment in October last year. Of the 58,322 cases selected under this so far, it has served digitally signed notices on 48,000 people.