2023 (11) TMI 43 - HC - Income Tax

Validity of assessment order passed u/s 143(3) r.w.s.144B - notice of demand u/s 156 and notice for initiation of penalty proceedings u/s 274 r.w.s. 270A - as argued no personal hearing was granted - respondent has returned with instructions on the specific query raised with instructions that seem to suggest that at the relevant point in time the respondents/revenue were working with the help of demo servers provided by the National Informatics Centre (NIC). HELD THAT - As stated that after respondents/revenue deployed its servers it lost access to the information stored on the demo servers and therefore the record of the hearing held by the AO cannot be recovered. The petitioner as noted on 10.03.2022 has asserted on affidavit that no personal hearing was granted. In the absence of relevant material this assertion would have to be accepted. In our view the best way forward would be to set aside the impugned assessment order with liberty to the AO to pass a fresh order after adhering to the principles of natural justice.

Summary

Issues involved:
The issues involved in the judgment are related to the assessment order dated 21.04.2021 passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961 for the assessment year 2018-2019. The challenge also includes the notice of demand issued under Section 156 of the Act and the notice for initiation of penalty proceedings under Section 274 read with Section 270A of the Act.

Assessment Order and Lack of Personal Hearing:
The petitioner/assessee raised a grievance regarding the assessment order dated 21.04.2021, contending that no personal hearing was granted despite a hearing being conducted via video-conferencing. The petitioner's representative stated that no personal hearing was provided, while the respondent/revenue assured to provide the record of proceedings held by the Assessing Officer (AO) on 16.04.2021. However, due to technical issues with the servers, the record of the hearing could not be retrieved. The court accepted the petitioner's assertion of no personal hearing and set aside the assessment order, directing the AO to pass a fresh order after ensuring principles of natural justice are followed.

Setting Aside of Assessment Order:
In light of the lack of evidence regarding the personal hearing granted to the petitioner/assessee during the assessment proceedings, the court decided to set aside the impugned assessment order dated 21.04.2021. The court emphasized the importance of adhering to the principles of natural justice and granted liberty to the AO to pass a fresh order in compliance with the legal requirements. The decision was made based on the absence of relevant material to support the claim of a personal hearing, thereby ordering the setting aside of the assessment order.

Disposal of Writ Petition:
Following the decision to set aside the assessment order, the writ petition was disposed of with the terms outlined in the judgment. The court directed both parties to act based on the digitally signed copy of the order, indicating the finality of the decision regarding the assessment order dated 21.04.2021. The judgment concluded by instructing the AO to proceed with the next steps in the matter according to the law, ensuring compliance with the principles of natural justice in future proceedings.