The Bombay High Court has quashed an income tax assessment order passed against Wrode and Wire Pvt. Ltd., holding that the proceedings by the Nation Faceless Assessment Centre (NFAC)) were conducted in undue haste and in violation of the principles of natural justice.
The bench of Justice B. P. Colabawalla and Justice Firdosh P. Pooniwalla quashed the assessment order, the demand notice, and all consequential penalty proceedings. The matter has been remanded to the jurisdictional Assessing Officer for fresh adjudication from the stage of the draft assessment order, with directions to provide adequate opportunity and grant a personal hearing. The Court also directed that the reassessment proceedings be completed within six months.
The case arose from an assessment order dated January 12, 2022, passed under Section 143(3) read with Section 144B of the Income Tax Act for Assessment Year 2018–19. The order resulted in a massive addition of over ₹65.68 crore and a consequential tax demand of ₹70.85 crore. The petitioner challenged not only the assessment order but also the demand notice and penalty proceedings initiated under multiple provisions of the Act.
The controversy centered around a show cause notice-cum-draft assessment order issued on January 6, 2022, which proposed an even higher addition exceeding ₹116.38 crore. The petitioner was granted barely 2.5 days to respond—effectively including a weekend—with the deadline falling on a Sunday. The company sought an adjournment citing the complexity and volume of the proposed additions as well as disruptions due to a COVID-19 variant. However, this request went unanswered, and the final assessment order was passed shortly thereafter on January 12, 2022.
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The High Court found this approach fundamentally flawed. It noted that granting such a short window, especially when it included non-working days, failed to provide a reasonable opportunity to respond. The Court emphasized that adherence to natural justice requires sufficient and meaningful opportunity to the assessee, particularly in cases involving substantial financial implications.
Further, the Court took serious note of the fact that the petitioner’s adjournment request was neither accepted nor rejected before proceeding to pass the final order. This silence, followed by immediate finalization of the assessment, was held to be arbitrary and unfair.
Another critical lapse identified was the denial of personal hearing. The draft assessment order imposed a condition that a personal hearing could only be sought after submitting a written response, which the Court found inconsistent with the statutory framework under Section 144B as it then stood.
Additionally, the Court observed that certain additions—such as disallowance of travelling expenses—were made directly in the final assessment order without being proposed in the draft order. This deprived the assessee of any opportunity to contest those additions, further violating procedural fairness.
Rejecting the Revenue’s contention that the petitioner should be relegated to alternate appellate remedies, the Court held that where a clear breach of natural justice is evident, writ jurisdiction under Article 226 can be invoked.
Case Details
Case Title: Wrode and Wire Pvt Ltd Versus National Faceless Assessment Centre
Citation: JURISHOUR-1001-HC-2026(BOM)Â
Case No.: Writ Petition No. 3533 Of 2022
Date: 24/04/2026
Counsel For Petitioner: Devendra H. Jain
Counsel For Respondent: Swapna Gokhale
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