2023 (6) TMI 1395 - HC - Income Tax

Denial of personal hearing through video conference - HELD THAT - As when the petitioner had made a specific request to afford an opportunity of personal hearing through video conference the Respondents were required to grant the same to the petitioner. However in the case on hand admittedly no such opportunity was granted to the petitioner and thereby the Respondents have committed the breach of the principles of natural justice. This petition deserves to be allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

1. Whether the failure to provide an opportunity for a personal hearing through video conferencing, as requested by the petitioner, constitutes a breach of the principles of natural justice.

2. Whether the impugned assessment order and demand notice should be quashed due to the lack of adherence to procedural requirements under the Income Tax Act, particularly Section 144B.

ISSUE-WISE DETAILED ANALYSIS

1. Failure to Provide Personal Hearing

- Relevant Legal Framework and Precedents: The petitioner invoked Section 144B(6)(viii) of the Income Tax Act, which mandates that when a request for a personal hearing is made, the relevant income-tax authority must allow such a hearing through video conferencing. The petitioner also referenced the case of 'AGRAWAL JMC JOINT VENTURE VS. ASSISTANT/ JOINT/ DEPUTY/ ASSISTANT COMMISSIONER OF INCOME TAX / INCOME TAX OFFICER', where similar issues were adjudicated.

- Court's Interpretation and Reasoning: The Court emphasized the importance of adhering to procedural requirements, particularly the provision for a personal hearing as per Section 144B. The Court found that the failure to provide a requested hearing through video conferencing constituted a violation of the principles of natural justice.

- Key Evidence and Findings: The petitioner submitted requests for a personal hearing through video conferencing on multiple occasions, including through the web portal of the Income Tax Department. Despite these requests, no opportunity was provided by the Respondents.

- Application of Law to Facts: The Court applied Section 144B(6)(viii) and concluded that the Respondents were obligated to provide a personal hearing. The lack of such an opportunity rendered the assessment process procedurally deficient.

- Treatment of Competing Arguments: The Respondents did not dispute the fact that a request for a personal hearing was made. The Court found no substantive argument from the Respondents justifying the denial of the hearing.

- Conclusions: The Court concluded that the failure to provide a personal hearing was a breach of natural justice, warranting the quashing of the impugned orders.

2. Quashing of the Impugned Orders

- Relevant Legal Framework and Precedents: Section 144B of the Income Tax Act outlines the procedure for faceless assessments, including the necessity for personal hearings upon request. The precedent set in the 'AGRAWAL JMC JOINT VENTURE' case reinforced the need for strict adherence to these procedural requirements.

- Court's Interpretation and Reasoning: The Court interpreted Section 144B as requiring strict compliance with procedural norms, including the provision of personal hearings when requested. The absence of such compliance rendered the assessment and demand notice invalid.

- Key Evidence and Findings: The assessment order and demand notice were issued without granting the requested personal hearing, despite the petitioner's multiple requests and the clear procedural mandate.

- Application of Law to Facts: The Court applied the procedural requirements of Section 144B to the facts, determining that the Respondents' failure to provide a hearing invalidated the assessment process.

- Treatment of Competing Arguments: The Respondents acknowledged the lack of a personal hearing but offered no compelling justification for this procedural lapse.

- Conclusions: The Court concluded that the procedural deficiencies necessitated the quashing of the impugned orders and remanded the matter for reassessment with a personal hearing.

SIGNIFICANT HOLDINGS

- The Court held that the failure to provide a personal hearing upon request is a breach of the principles of natural justice, as enshrined in Section 144B of the Income Tax Act.

- The Court established the principle that procedural compliance, including the provision of personal hearings, is essential for the validity of assessment orders under the faceless assessment scheme.

- The final determination was to quash the impugned assessment order and demand notice, remanding the matter to the Assessing Officer with instructions to provide a personal hearing and issue a fresh, reasoned order.

- The Court's ruling underscores the importance of adhering to procedural safeguards to ensure fairness and transparency in administrative proceedings.