Madras High Court sets aside order questioning effectiveness of E-Proceeding facility

The Madras High Court has set aside a previous order concerning the Income Tax Department's E-Proceeding facility. The court found that the original writ petition improperly commented on the merits of a tax assessment and the effectiveness of the e-governance system. It clarified that Assessing Officers must make independent decisions without undue influence from superior authorities or observations made in writ petitions that go beyond the scope of the case.

In The Deputy Commissioner of Income Tax v. Salem Sree Ramavilas Chit Company Private Limited [Writ Appeal No.1872 of 2021 dated August 04, 2021] The Deputy Commissioner of Income Tax ("the Appellant") has filed the current appeal against Order W.P.No.1732 of 2020. dated February 04, 2020 on the ground that the Appellant was not provided with a hearing opportunity and that the Hon'ble High Court of Madras made observations on the merits of the assessment when the dispute was on question of fact, which could not have been done in a writ petition.

Salem Sree Ramavilas Chit Company Private Limited ("the Respondent") filed a Writ Petition to quash the Assessment Order dated December 27, 2019 regarding the assessment of amount held by the Respondent for the Assessment Year 2017-18. The Hon'ble Madras High Court passed an Order on February 04, 2020 in this regard commenting upon the efficacy and efficiency of the E-Proceeding facility and merits of the assessment which has been challenged in the current appeal.

The Hon'ble Madras High Court observed that no person or Authority can direct the Assessing Officer ("AO") to complete assessment in a particular manner as the AO has to independently decide an issue and should not be guided by any terms and conditions issued by the superior authority.

Further noted that the Writ Petition dated February 04, 2020 only challenged the Assessment Order dated December 29, 2019 and was not in the nature of Public Interest Litigation ("PIL") nor a Writ Petition where a declaratory relief was sought for against E-Proceeding facility, therefore, the observations made in this regards are eschewed.

Thus, the Hon'ble High Court set aside all observations made in the Writ Petition dated February 04,2020 by with reference to the effectiveness of the E-Governance implemented by the Income Tax Department ("ITD") and the observations and findings rendered in the impugned order touching upon the merits of the assessment.