ISSUE 5 :- FROM THE SIDE OF ASSESSEE

1. Addition by AO is not sustainable

2. Variation in amount in final assessment order is arbitrary
.
Galaxy Surfactants limited v. assistant commissioner of income tax :- Assessing Officer is not
empowered to review his own draft assessment order without any direction from the DRP and reduce
the additions made in the drat assessment order. There are no provisions in the Act and rules nor does
any instruction issued by the CBDT in this regard that an Assessing officer can review its own Draft
Assessment order. As per section 144C(3), the final order shall be based on the draft assessment order.
Reviewing the draft Assessment order without any direction from the DRP is erroneous. There is no
section of law to do such review by due Assessing Officer Further, the AO has not given any reason why
he is doing so. Therefore it is also a non-speaking order which accentuates the error further.

Once an Assessing Officer prepares a draft assessment order, that is the end of his domain of powers so
far as framing of assessment is concerned- unless of course there are any directions from the Dispute
Resolution Panel which are required to be implemented by the Assessing Officer.

The change of heart on the part of the Assessing Officer, howsoever well meaning and justified as it may
be, is not permissible at the stage of passing the final assessment order.

The order of the Assessing Officer was thus clearly erroneous as also prejudicial to the interest of the
assessee

Analjit Singh, Delhi vs Dcit :- That the CIT(A) erred on facts and in law in not admitting
and considering the additional evidence filed by the appellant in accordance with Rule 46A
of the Income Tax Rules, 1962 ('the Rules')(in our case AO does not verified the value of the
land)

Kiran R. Sawlani
v.
Income-tax Officer, (Intl. Tax)
 That the Learned AO has erred in confirming and upholding the Addition of Income made by the
Assessing Officer on account of consideration that the Addition to Income is sustainable within section
56(2)(x) and the same can be brought under Tax-net under section 56(2)(x) of the Income-tax Act, 1961,
Which is unjustified, unwarranted and bad in law.

It was the claim of the assessee that as the property under consideratoin was situated in a slum area,
therefore, the marketvalue of the same was much lower than the value of the other buildings in the
neighbouring areas.(modify)
as we are not inclined to accept the manner in which the A.O had made an addition in the hands of the
assessee u/s. 56(2)(vii)(b)(ii) of the Act i.e without making a reference to the valuation officer as was
required per the mandate of sec. 50C(2) of the Act

Original assessment was framed by the A.O vide his order issued dated 2 december, 2021, where he had
added 25lakh but after that, inter alia, making an addition of 40 lakh under section 56(2)(x) of the Act 

However, the aforesaid explanation of the assessee did not find favour with the A.O who took
the value that was adopted by the Stamp Valuation Authority i.e 40 lakh as the value of the property in
question and made an addition of the same under section 56(2)(x) in the hands of the assessee.
According to him, Section 144B of the Act, made effective from 1st April, 2021, had brought about a
new era of faceless assessment where Assessing Officers cannot be identified during the
assessment proceedings. He submitted that grant of personal hearing in routine and mechanical
manner or stereotyped manner would not only frustrate the entire concept of Faceless Assessment
Scheme but would also defeat the very purpose for which this Scheme was brought about by the
Legislature. He pointed out that the Legislature, in its own wisdom, had provided for a mechanism
for grant of personal hearing in deserving cases falling in the category of Section l44B of the Act
itself.

He further stated that this Court in Sanjay Aggarwal (supra) and other similar matters has held that
as no standards, procedures and process in terms of sub-clause (h) of Section 144B(7)(xii) read with
Section 144B(7)(viii) of the Act had been framed, it was incumbent upon Revenue to accord
personal hearing to the petitioner. He emphasised that the aforesaid finding given by this Court was
due to Revenue counsel not producing the standard procedure and process framed by the Revenue.
He pointed out that the Standard Operating Procedure for personal hearing through video
conference under the Faceless Assessment Scheme, 2019 was issued by CBDT vide Circular
F.No.Pr.CCIT/NeAC/SOP/2020-21 dated 23rd November, 2020. He stated that CBDT vide order
F.NO.187/3/2020-ITA-I dated 31st March, 2021 extended the Circulars/notifications issued under
Faceless Assessment Scheme to the Faceless Assessment under Section 144B of the Act and,
therefore, the SOP contained in circular dated 23rd November, 2020 was equally applicable to the
proceedings under Section 144B of the Act also. The circular dated 23rd November, 2020 is
reproduced hereinbelow:- “Where any modification is proposed in the draft assessment order (DAO)
issued by any AU and the Assessee or the authorized representative in his/her written response
disputes the facts underlying the proposed modification and makes a request for a personal hearing,
the CCIT ReAC may allow personal hearing through Video Conference, after considering the facts &
circumstances of the case, as below:- 1. The Assessee has submitted written submission in
response to the DAO. 2. The Video Conference will ordinarily be of 30 minutes duration. It may be
extended on the request of the Assessee or authorised representative. 3. The Assessee may furnish
documents/evidence, to substantiate points raised in the Video Conference during the session or
within a reasonable time allowed by the AU, after considering the facts and circumstances of the
case.” (emphasis supplied) 11. Therefore, according to him, the personal hearing is discretionary.
He emphasised that under faceless assessment under Section 144B of the Act, the assessee does
not have a vested right to personal hearing and the same could be granted depending upon the
individual facts of each case and fulfilling of the conditions laid down in SOP dated 23rd November,
2020.
Mr. Chandra, on the other hand, says that the expression used in clause (vii) of sub-
section (7) of Section 144B is ‘may’ and not ‘shall’, and therefore, there is no vested
right in the petitioner to claim a personal hearing.

According to Mr. Chandra, since, even before the issuance of the show-cause notice-
cum-draft assessment order, dated 23.04.2021, several opportunities were given to
the petitioner to respond, which is reflected in the correspondence exchanged
between the petitioner and the respondent/revenue, and failure to grant personal
hearing to the petitioner did not render the proceedings non-est as the same was not
mandatory.