2022 (4) TMI 1229 - HC - Income Tax

Validity of National Faceless Assessment order - denial of natural justice - non affording an opportunity of the petitioner to be heard through Video Conferencing - HELD THAT - The impugned order has been passed without affording an opportunity of the petitioner to be heard through Video Conferencing. The petitioner's request has not been considered, despite a specific request of the petitioner. Though the Assessment is now through National Faceless Assessment Centre and system enabled and the distribution of work is through portal, nevertheless, the system has to operate in such a way to allow assessee to participate in the proceedings through Video Conferencing if they desire. It is not sufficient for the respondent to state that the petitioner has not pressed the link for Video Conferencing in the notice issued. The order has been passed without giving an opportunity for personal hearing through Video Conferencing to the petitioner, I am inclined to quash the impugned order and remit the case back to the respondent to pass a speaking order on merits and in accordance with law within a period of sixty days from the date of receipt of a copy of this order.

Summary

Issues:
Challenge to Assessment order for AY 2018-19 based on violation of principles of natural justice and denial of Video Conferencing participation.

Analysis:
1. The petitioner challenged the Assessment order dated 13.08.2021 for AY 2018-19, following notices under Section 142(1) of the Income Tax Act. The show cause notice dated 25.03.2021 proposed the addition of estimated profits for two projects, 'Triveni' and 'Olive Tides.' The petitioner requested to participate through Video Conferencing.

2. Subsequently, a second show cause notice dated 19.06.2021 was issued, proposing a demand for 'Triveni,' dropping the addition under Section 68. The petitioner was asked to respond by 23.06.2021, seeking Video Conferencing participation. Despite representations, Video Conferencing was not extended.

3. The petitioner argued that the impugned order violated natural justice principles due to the lack of Video Conferencing participation, requesting the order to be quashed. The respondent contended that the system allowed Video Conferencing by opting through a link in the notice, which the petitioner did not utilize.

4. The respondent claimed the petitioner had an alternate remedy under Section 246A of the Income Tax Act, justifying the dismissal of the writ petition. The Court examined the notices, the petitioner's responses, and the impugned order, noting the petitioner's compliance with most requirements.

5. After hearing both parties, the Court observed that the impugned order was passed without affording the petitioner a Video Conferencing hearing, despite specific requests. The Court emphasized the need for the system to allow assesses to participate in Video Conferencing, even in a National Faceless Assessment Centre setup.

6. Due to the lack of Video Conferencing opportunity, the Court decided to quash the impugned order and remit the case to the respondent for a speaking order within sixty days, directing the Administrator to enable Video Conferencing participation. The writ petition was allowed with no costs, closing connected miscellaneous petitions.