2024 (9) TMI 1131 - HC - Income Tax

Validity of impugned order u/s 144B as legal and justified - say of the petitioner that while passing the re- assessment order, the effective opportunity of hearing was not given during the course of argument - HELD THAT - It is the duty cast upon the authorities in faceless assessment, if there is a demand for personal hearing, the same deserve to be granted. Keeping in mind the mandatory provision, if the facts of the present case is considered, indisputably, the request made by the petitioner for personal hearing through video conferencing at that stage was acceded to, however, intimation thereof was sent after the time of hearing was scheduled. Admittedly, on the second time, the request of the petitioner for granting personal hearing through video conferencing, intimation there of was to be given one day advance, was not either acceded to or taken care of by the revenue authorities and straightway, the impugned order was passed. Thus, in our considered opinion, while passing the impugned order, the provision of Section 144B was not complied with by the revenue authorities and there by, the order passed cannot be sustained in eye of law. Without going further into merits of the case, it would be in the fitness of thing that the petition is allowed solely on the ground of violation of principle of natural justice, without adverting to anything on merits.

Issues:
Challenge to assessment order and demand notice under Income-Tax Act, 1961.

Analysis:
The petitioner challenged the assessment order dated 28.3.2022 and demand notice issued under Section 156 of the Income-Tax Act, 1961. The petitioner filed its return of income on 16.9.2010, declaring a total loss and brought forward loss for the Assessment Year 2010-11. The case underwent scrutiny assessment, resulting in an order assessing total loss and book profit under Section 115JB of the Act. Subsequently, the case was reopened due to alleged bogus purchases and wrong CENVAT credit claims. The Principal Commissioner of Income Tax revised the order under Section 263(1) of the Act, leading to fresh assessment directions. The petitioner approached the Income Tax Appellate Tribunal, and a notice under Section 143(2) was issued for scrutiny assessment. The petitioner raised objections regarding the notice's timing, but no response was received. The respondent issued a show cause notice proposing income variation, leading to a request for a personal hearing through video conferencing. However, the communication for the hearing was received late, and the order was passed without granting a new hearing date. The petitioner approached the High Court seeking to quash the assessment order and demand notice, requesting a stay on demand recovery. The petitioner argued violations of natural justice and procedural irregularities in the assessment proceedings.

The petitioner's counsel contended that the assessment order was made in violation of natural justice, citing failure to provide a personal hearing through video conferencing and non-issuance of required notices under the Act. The counsel highlighted that the Assessing Officer raised a substantial demand without providing a hearing, emphasizing arbitrariness and lack of natural justice principles. The petitioner urged the Court to set aside the assessment order based on these grounds. In contrast, the respondent's counsel supported the assessment order, asserting its legality and adherence to the law. The respondent argued that the petitioner had alternative remedies available and thus the writ petition was not maintainable. The respondent requested the Court to dismiss the petition.

After hearing both parties and reviewing the record, the Court considered whether the assessment order dated 28.3.2022 was legal and justified. The Court noted the petitioner's claim of lack of effective hearing during the re-assessment process, which remained uncontested by the revenue authorities. Referring to Section 144B of the Act, the Court emphasized the duty to grant personal hearings if requested in faceless assessments. The Court observed that while the petitioner's request for a video conferencing hearing was accepted, the intimation was delayed, and subsequent requests for advance notice were ignored. Consequently, the Court found that the revenue authorities did not comply with Section 144B, leading to a violation of natural justice principles. Therefore, the Court allowed the petition solely on the ground of procedural irregularities, quashing the assessment order and remanding the proceedings back to the revenue authorities for a fresh order in accordance with the law. No costs were awarded in the matter.

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