2023 (9) TMI 1618 - HC - Income Tax

Validity of order passed u/s 147 r.w.s.143(3) - Denial of principles of natural justice as denying opportunity of personal hearing through video conferencing - HELD THAT - As pursuant to the notice calling for details u/s 142(1) by a notice dated 06.12.2021, the petitioner had immediately responded on 13.12.2021. The respondent did not proceed in the matter for more than three months. On 23.03.2022, with just seven days left before the assessment was getting time barred, a show cause notice was issued on 23.03.2022. A reply was filed on 26.03.2022. An opportunity of personal hearing was asked for and to which the petitioner received an intimation on 27.03.2022 that a personal hearing through video conferencing would be conducted on 29.03.2022. When the petitioner s authorized representative logged into the link, because of a technical glitch in the portal hearing could not take place. It is the case of the petitioner that the officer from the National Faceless Assessment Center logged in and apologized to the representative through the chat-box. Obviously these circumstances show that the petitioner though had asked for a personal hearing through video conferencing was denied such opportunity. On this ground alone the order of assessment is quashed and set aside. The matter is remanded to the competent authority from the stage of giving personal hearing to the petitioner through video conferencing in compliance of provisions of the Act.

Summary

Issues:
1. Validity of assessment order passed under Section 147 read with Section 144D of the Income Tax Act for the assessment year 2016-17.
2. Breach of principles of natural justice in passing the assessment order.
3. Denial of opportunity of personal hearing through video conferencing.

Analysis:
The petitioner, engaged in the business of design, manufacturing, supply, and installation of lifts, filed a petition under Article 226 challenging the order dated 31.03.2022 passed under Section 147 read with Section 144D of the Income Tax Act for the assessment year 2016-17. The petitioner's case for A.Y. 2016-17 was initially taken up for scrutiny assessment under Section 143(3) of the Income Tax Act. The returned income was accepted after detailed scrutiny. Subsequently, the petitioner received a notice for reopening of assessment under Section 148, followed by multiple notices and replies regarding the issues raised. The respondent delayed proceedings for over three months after receiving responses from the petitioner.

In a sequence of events, just seven days before the assessment was getting time-barred, the respondent issued a show cause notice proposing an addition in the petitioner's case. Despite the petitioner submitting replies and additional evidences, the assessment order was passed confirming the proposed addition. The petitioner argued that the order was passed in breach of principles of natural justice due to the short notice period and denial of a personal hearing opportunity.

During the proceedings, the court granted interim relief staying the operation of the order, demand notice, and penalty imposition notice. It was noted that the Revenue had adjusted a refund from a different assessment year against the outstanding amount of the petitioner, breaching the stay order. After hearing both parties, the court found that the petitioner was denied a proper opportunity of personal hearing through video conferencing, leading to the quashing and setting aside of the assessment order. The matter was remanded for a fresh order to be passed within twelve weeks from the date of granting a personal hearing to the petitioner, ensuring compliance with the provisions of the Act. The petition was allowed accordingly.