2023 (12) TMI 219 - HC - Income Tax

Assessee to be reheard when there is change of AO - Denial of natural justice - non-provision of opportunity of personal hearing - HELD THAT - No notice, subsequent to the receipt of reply from the petitioner, was issued to the petitioner and further, no evidence has been produced by the respondent to show that the notice was issued to the petitioner for personal hearing before passing the impugned order and the opportunities, that were stated to have been provided to the petitioner were only for the purpose of calling forth certain details/reply from the petitioner, those opportunities, cannot be deemed to be an opportunities of hearing to the petitioner since the question of affording opportunity of personal hearing would come into picture only after the receipt of reply/objections from the petitioner. Thus, in the present case, it is evidently clear that after the petitioner filed reply dated 22.07.2022 to the clarification sought for by the respondent finally vide letter dated 19.07.2022, the petitioner has not been afforded with any opportunity of personal hearing and in these circumstances, the impugned order came to be passed, which would per se prove that the order has been passed in clear violation of principles of natural justice. Even assuming that the impugned order is passed by an incumbent Officer, who continued the proceedings in the place of earlier Assessing Officer and even the earlier AO, who existed before the incumbent Officer has not issued any notice for personal hearing after the petitioner's filed reply. Therefore, the contention of the learned Senior Standing Counsel for the respondent-Department that the petitioner has failed to make a use of the opportunity granted under Section 129 I.T.Act, as he has not sought for an opportunity of rehearing is untenable and it would only means to putting the cart before horse. Writ Petition is allowed, the impugned order is set aside and the matter is once again remanded back to the respondent for re-consideration of the assessment proceedings after providing an opportunity of personal hearing to the petitioner.

Summary

Issues Involved:
The issues involved in this case are the assessment order passed by the respondent for the Assessment Year 2018-19, violation of principles of natural justice, non-provision of opportunity of personal hearing, and challenge to the assessment order dated 30.07.2022.

Assessment Order Challenge:
The petitioner, an assessee under the Income Tax Act, filed ITR-3 for AY 2018-19 declaring gross total income. The case was selected for limited scrutiny regarding agricultural income. Despite the petitioner filing responses and documents, the respondent passed an assessment order treating gross total income differently, leading to a demand. The petitioner challenged this order, resulting in its quashing and remittance for a speaking order. However, the respondent issued further notices and clarification letters, eventually passing a new assessment order on 30.07.2022, which the petitioner now challenges.

Violation of Natural Justice:
The petitioner's counsel argues that the impugned order was passed without providing an opportunity of personal hearing, violating principles of natural justice. The petitioner's main grievance is the lack of a personal hearing, as the respondent proceeded to pass the assessment order without considering the details furnished by the petitioner. The petitioner contends that the order was passed in gross violation of natural justice principles, as the new Assessing Officer did not inform about the change, denying the petitioner a chance for a rehearing.

Respondent's Defense:
The respondent contends that sufficient opportunities were provided to the petitioner before passing the assessment order. However, the petitioner's failure to seek a rehearing opportunity after the change of Assessing Officer is highlighted. The respondent assures compliance with any orders passed by the Court.

Court's Decision:
The Court notes that the earlier assessment order was quashed due to a lack of opportunity for the petitioner to be heard. Despite subsequent communications from the petitioner, the respondent did not provide a personal hearing before passing the impugned order. The Court finds that the order was passed in clear violation of natural justice, as no opportunity for personal hearing was granted after the petitioner's replies. Consequently, the impugned order is set aside, and the matter is remanded back to the respondent for re-consideration after providing the petitioner with a personal hearing scheduled for 20.12.2023.

Conclusion:
The Court allows the Writ Petition, setting aside the impugned order and directing a re-consideration of the assessment proceedings with a scheduled personal hearing for the petitioner. No costs are awarded, and connected Writ Miscellaneous Petitions are closed.