2022 (5) TMI 232 - HC - Income Tax

Assessment Order 147 read with Section 144B - violation of principle of natural justice as despite making a request for grant of personal hearing, the same was not provided by the respondent - HELD THAT - Having heard learned counsel for the parties, this Court is of the view that the issue involved in the present writ petition is no longer res integra. This Court in the case of Bharat Aluminium Company Ltd. vs. Union of India Ors. 2022 (1) TMI 658 - DELHI HIGH COURT has held that the use of the expression may in Section 144B(7)(vii) is not decisive. Where a discretion is conferred upon a quasi-judicial authority whose decision has civil consequences, the word may which denotes discretion should be construed to mean a command. Consequently, requirement of giving an assessee a reasonable opportunity of personal hearing is mandatory. It was further held that the classification made by the Respondent between the matters involving disputed questions of fact and questions of law by way of the Circular dated 23rd November, 2020 is not legally sustainable. Accordingly, the impugned assessment order passed under Section 147 read with Section 144B for the assessment year 2016-17 is quashed and the matter is remanded back to Respondent for passing a fresh order in accordance with law after giving an opportunity of personal hearing.

Summary

Issues Involved:
Challenging assessment order under Section 147 read with Section 144B of the Income Tax Act, 1961 for lack of personal hearing.

Analysis:
The petitioner filed a writ petition challenging the Assessment Order dated 28th March, 2022, under Section 147 read with Section 144B of the Income Tax Act, 1961, citing a violation of the principle of natural justice due to the absence of a personal hearing despite a request made. The petitioner relied on the judgment in Sanjay Aggarwal vs. National Faceless Assessment Centre Delhi, where the final assessment order was set aside for not providing a personal hearing to the assessee.

Upon hearing both parties, the court noted that the issue was settled in the case of Bharat Aluminium Company Ltd. vs. Union of India & Ors., where it was held that the discretion to grant a personal hearing under Section 144B(7)(vii) should be construed as mandatory when civil consequences are involved. The court emphasized that the requirement of providing a reasonable opportunity for personal hearing is mandatory, and any classification between matters involving disputed questions of fact and questions of law is not legally sustainable.

Consequently, the court quashed the impugned assessment order dated 28th March, 2022, and remanded the matter back to the respondent for passing a fresh order in compliance with the law after granting a personal hearing to the petitioner. The court disposed of the writ petition and applications, leaving the rights and contentions of all parties open for further proceedings.