2022 (2) TMI 438 - HC - Income Tax

Validity of Faceless Assessment u/s 144B - Non grant of personal hearing or liberty of being heard - petitioner objected to the show cause notice and the proposed addition in draft assessment order and requested to complete the assessment on returned income - HELD THAT - Both these notices were responded to by the petitioner-assessee. Both these responses were not found satisfactory and were rejected on reasons mentioned in detail in the impugned assessment order. Assessing Authority also found that the assessee failed to provide documents supportive of his stand, thereafter, final show cause notice was again issued on 27.01.2021 for proposed additions of ₹ 2,86,01,971/- treating it as unexplained income. The impugned order of the assessment further reveals that in response to this final show cause notice, the assessee/petitioner has submitted details with documents of capital increased which were considered and not found satisfactory, thereafter, another show cause notice was issued on 27.01.2021, in response to which assessee submitted certain details and documents with capital account. After having afforded liberty as aforesaid of being heard which appears to be not only reasonable but sufficient, the Assessing Authority passed the impugned order (Annexure P/1). What comes out loud and clear is that liberty of being heard was offered to the petitioner. The decision taken by the impugned order may or may not be correct is not for this Court to dwell upon especially when the statutory appeal preferred by the petitioner is pending consideration. More so, since the petitioner did not make any specific express demand for a personal hearing, the non grant of personal hearing by the Assessing Officer cannot lead to a case of breach of principles of natural justice ( audi alteram partem ) thereby enabling the petitioner to directly approach this Court under Article 226 of the Constitution especially in the face of pending statutory appeal.

Summary

Issues:
1. Petition under Article 226 for relief including quashing of assessment order.
2. Maintainability of petition despite pending appeal under Section 246A of the Income Tax Act, 1961.
3. Violation of statutory provisions, specifically Section 144(B)(7)(vii) of the Income Tax Act.
4. Right to personal hearing under Faceless Assessment.
5. Allegation of denial of statutory right to personal hearing.
6. Interpretation of the language used in a taxing statute.
7. Dismissal of the petition with liberty to pursue appeal.

Analysis:

1. The petitioner filed a petition under Article 226 seeking relief, including the quashing of an assessment order. The petitioner's counsel argued that despite a pending appeal under Section 246A of the Income Tax Act, the petition raised uncontroverted facts and violations of statutory provisions, particularly Section 144(B)(7)(vii) of the Income Tax Act, making the petition maintainable for adjudication on merits.

2. The petitioner contended that a show cause notice led to a response seeking a personal hearing as per Section 144(B)(7)(vii) of the IT Act. The Court noted that certain contentions raised by the petitioner were more related to the appeal's merits pending before the Appellate Authority, refraining from delving into those aspects.

3. The provision of Section 144(B)(7)(vii) grants the assessee the right to request a personal hearing to present their case or make oral submissions before the Authority. The petitioner alleged denial of this right despite requesting a personal hearing in their reply.

4. The Court examined the petitioner's alleged request for a personal hearing and found that the petitioner objected to the show cause notice, proposed additions, and requested completion of assessment on the returned income, offering video conferencing if needed. The Assessing Authority had the discretion to grant a video conferencing hearing if in doubt about the petitioner's contentions.

5. The impugned assessment order revealed multiple interactions between the petitioner and the Assessing Authority, including responses to notices and submissions of documents, leading to the final assessment order. The Court emphasized that the liberty of being heard was offered to the petitioner, and the decision's correctness was not within its purview, especially with a pending statutory appeal.

6. The Court highlighted the principle that in interpreting taxing statutes, one must focus solely on the language used without presumptions or implications. This principle was underscored by a historical legal perspective.

7. Ultimately, the Court dismissed the petition, allowing the petitioner to pursue the remedy of appeal. The order clarified that no findings on the merits of the claim were made, leaving parties free to raise contentions before the Appellate Authority in accordance with the law.