2022 (1) TMI 1289 - HC - Income Tax

Validity of Faceless Assessment - whether the respondent authority have followed the due procedure of law as envisaged under Section 144B(7) (vii) and section 144B(7)(xii) of the Act while passing the impugned final assessment order dated 12.08.2021? - HELD THAT - It transpires from the record that on earlier occassion pursuant to the detail submissions made on 10.04.2021 AO had given option vide notice dated 23.04.2021 for video conference hearing. Because of technical glitches the video conference hearing as scheduled could not be conducted and it was thereafter that the AO had once again addressed notice dated 04.06.2021 thereby offering opportunity to the writ applicant/assessee to activate the video conference request. Even in the affidavit-in-reply filed by the Deputy Commissioner of Income Tax Circle 1(1)(1) Vadodara the stand of the respondent authority is that the assessee was requested to respond for video conference activation by 09.08.2021 and has further confirmed that the writ applicant had activated the video conference on 09.08.2021 and had requested for hearing on 16.08.2021. Thus we have no hesitation in holding that inspite of specific request for personal hearing being requested by the writ applicant the respondent authority without adhering to such request having proceeded to pass final assessment order is in clear violation of the aforesaid statutory scheme and is therefore held to be null and void and is hereby quash and set aside. In the result the writ application succeeds. The matter is remanded back to the Assessing Officer and the Assessing Officer is hereby directed to grant an opportunity of personal hearing to the writ applicant by way of video conference. 12. In the result the writ application succeeds. The matter is remanded back to the Assessing Officer and the Assessing Officer is hereby directed to grant an opportunity of personal hearing to the writ applicant by way of video conference. It is expected of the authority to serve advance notice giving 15 days time to the writ applicant while fixing date of personal hearing and thereafter will be at liberty to pass a final assessment order in accordance with law.

Summary

Issues Involved:
1. Violation of Section 144B of the Income Tax Act, 1961.
2. Denial of personal hearing through video conferencing.
3. Maintainability of the writ application.

Issue-wise Detailed Analysis:

1. Violation of Section 144B of the Income Tax Act, 1961:
The writ applicant challenged the assessment order dated 12.08.2021, asserting it was illegal and arbitrary, passed in gross violation of Section 144B of the Income Tax Act, 1961. The applicant argued that the order was issued without following the due procedure prescribed under Section 144B, specifically the National Faceless Assessment Centre (NFAC) procedures. Section 144B mandates a faceless assessment process, ensuring transparency and adherence to principles of natural justice. The court noted that Section 144B(9) explicitly states that any assessment not made in accordance with its procedures is non-est, thus rendering the impugned order void.

2. Denial of Personal Hearing Through Video Conferencing:
The writ applicant contended that despite multiple requests for a personal hearing via video conference, the respondent authority failed to provide such an opportunity. The applicant had made specific requests on 10.04.2021 and 09.08.2021, which were ignored, leading to the final assessment order being passed without the mandated hearing. The court referenced similar cases, including Agrawal JMC Joint Venture vs. Assistant/Joint/Deputy/Assistant Commissioner of Income Tax, and decisions by the Delhi and Bombay High Courts, which underscored the necessity of granting a personal hearing when requested. The court concluded that the respondent's failure to provide a video conference hearing was a clear violation of the statutory scheme under Section 144B and principles of natural justice.

3. Maintainability of the Writ Application:
The respondent authorities argued against the maintainability of the writ application, suggesting that the applicant should have pursued an appeal under Section 246A of the Act. However, the court held that the writ application was maintainable due to the fundamental breach of procedural requirements under Section 144B, which rendered the assessment order non-est. The court emphasized that statutory remedies do not preclude judicial review in cases where principles of natural justice are violated.

Conclusion:
The court held that the assessment order dated 12.08.2021 was null and void due to the respondent authority's failure to adhere to the statutory procedure under Section 144B, specifically the denial of a personal hearing through video conferencing. The court quashed the impugned order and directed the Assessing Officer to grant the writ applicant an opportunity for a personal hearing via video conference, with a 15-day advance notice. The assessment proceedings were ordered to be completed within three months from the date of receipt or upload of the court's order. The writ application was disposed of accordingly.