2024 (5) TMI 1258 - HC - Income Tax

Validity of assessment order - violation of the principles of natural justice and denial of effective hearing to the petitioner - HELD THAT - Petitioner was not given effective hearing and without providing the effective hearing the impugned assessment order has been passed, the order suffers from violation of the principles of natural justice and, therefore, the same is set aside. The matter is remitted back to the 2nd respondent to provide fresh link to the petitioner intimating the date and time for hearing and after hearing the petitioner on the date and time fixed, the assessment order should be finalised expeditiously in accordance with the law. WP allowed.

Summary

Issues:
Violation of principles of natural justice and denial of effective hearing in an assessment order under the Income Tax Act, 1961 for the assessment year 2016-17.

Analysis:
The petitioner challenged an assessment order dated 13.03.2024 under Sections 147, 144, and 144B of the Income Tax Act, 1961 for the assessment year 2016-17, alleging violation of natural justice principles and denial of effective hearing. The petitioner, an assessee, had not filed the income return for the said assessment year. The Department suspected that capital gains from a property sale had escaped assessment, leading to a Show Cause Notice and subsequent proceedings. Despite the petitioner's attempts to participate in a video conference hearing, technical issues prevented their involvement. The petitioner's claim of being denied an effective opportunity for hearing due to technical failures was supported by evidence, including a screenshot and an email. The Revenue's counsel did not contest this evidence. The court held that the lack of effective hearing constituted a violation of natural justice principles under Article 14 of the Constitution of India. Consequently, the assessment order was set aside, and the matter was remitted to the 2nd respondent for a fresh hearing with proper notice to the petitioner, emphasizing the need for compliance with statutory provisions and principles of natural justice.

This judgment highlights the significance of providing an effective opportunity for hearing in administrative proceedings, particularly in matters concerning taxation. The court emphasized that the failure to ensure a meaningful hearing can render an order illegal and subject to being set aside. The case underscores the importance of upholding natural justice principles, such as the right to be heard, in administrative decision-making processes. The court's decision to remit the matter for a fresh hearing reflects the commitment to ensuring procedural fairness and adherence to legal requirements in assessment proceedings. The judgment serves as a reminder to administrative authorities to conduct proceedings in a manner that upholds the principles of natural justice and affords parties a fair opportunity to present their case.