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2025 (1) TMI 770 - HC - Income TaxValidity of assessment order - non granting a personal hearing, even though such a hearing was specifically requested - HELD THAT - It is clear that where a request for personal hearing has been received, the income tax authority of the relevant unit shall allow such a hearing through the National Faceless Assessment Centre, which shall be conducted exclusively through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony, to the extent technologically feasible, in accordance with the procedure laid down by the Board. Since, in this case, we are satisfied that the Petitioner requested a personal hearing and admittedly, no such personal hearing was granted to the Petitioner, we set aside the impugned assessment order on the grounds of violation of the principles of natural justice and fair play on the ground of breach of Section 144B(6) (vii) and (viii) of the Act, which provisions incorporate the principles of natural justice and fair play. The consequential demand notice/penalty notice issued based on the impugned assessment order will also not survive and are set aside. We remand the matter for fresh consideration and disposal of the show cause notice issued to the Petitioner after granting the Petitioner an opportunity for a personal hearing in terms of the above-referenced statutory provisions. 1. ISSUES PRESENTED and CONSIDERED The core legal questions considered in this judgment are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Violation of Principles of Natural Justice Relevant legal framework and precedents: The relevant legal framework is Section 144B(6)(vii) and (viii) of the Income Tax Act, 1961, which provides that if a request for a personal hearing is made, the income tax authority must allow such a hearing through video conferencing. The Petitioner also relied on a precedent from the Co-ordinate Bench of the Bombay High Court in a similar matter. Court's interpretation and reasoning: The court interpreted Section 144B(6)(vii) and (viii) to mean that once a request for a personal hearing is received, it is mandatory for the income tax authority to grant such a hearing. The court emphasized the importance of adhering to the principles of natural justice, which include the right to be heard. Key evidence and findings: The Petitioner provided evidence of having requested a personal hearing through digital communication and reiterated this request in subsequent written communications. The Respondents' affidavit did not firmly deny the receipt of such requests but suggested a possible technical issue in executing the request. Application of law to facts: The court applied the provisions of Section 144B(6)(vii) and (viii) to the facts, finding that the Petitioner had indeed requested a personal hearing, which was not granted. This constituted a breach of the statutory provisions and a violation of the principles of natural justice. Treatment of competing arguments: The Respondents argued that no request for a personal hearing was received, citing a technical issue. However, the court found this argument vague and unsupported by concrete evidence, particularly when contrasted with the documentary evidence provided by the Petitioner. Conclusions: The court concluded that the assessment order was passed in violation of the principles of natural justice due to the denial of a personal hearing, which was requested by the Petitioner. Consequently, the assessment order and any consequential notices were set aside. 3. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning: "Since, in this case, we are satisfied that the Petitioner requested a personal hearing and admittedly, no such personal hearing was granted to the Petitioner, we set aside the impugned assessment order on the grounds of violation of the principles of natural justice and fair play on the ground of breach of Section 144B(6) (vii) and (viii) of the Act, which provisions incorporate the principles of natural justice and fair play." Core principles established:
Final determinations on each issue:
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