2021 (8) TMI 89 - HC - Income Tax

Faceless assessment u/s 144B - no hearing had been granted before passing the impugned assessment order - HELD THAT - As relying on SANJAY AGGARWAL 2021 (6) TMI 336 - DELHI HIGH COURT on the present case no hearing had been granted before passing the impugned assessment order, there is a violation of principles of natural justice as well as mandatory procedure prescribed in Faceless Assessment Scheme and stipulated in Section 144B of the Act. Consequently, the impugned assessment order dated 31st May 2021 and all proceedings initiated pursuant thereto are set aside and the matter is remanded back to the Assessing Officer, who shall grant an opportunity of hearing to the petitioner by way of Video Conferencing and thereafter pass a reasoned order in accordance with law. With the aforesaid directions, the present writ petition and pending application stand disposed of.

Summary

Issues: Challenge to Assessment Order based on lack of personal hearing and violation of principles of natural justice under Section 144B of the Income Tax Act, 1961.

In this case, the petitioner challenged the Impugned Assessment Order dated 31st May 2021, arguing that it was passed without providing a personal hearing despite multiple requests for the same. The petitioner contended that this lack of personal hearing violated the principles of natural justice and the provisions of Section 144B (7) and Section 144B (9) of the Income Tax Act, 1961. The Respondents, on the other hand, argued that the use of the term 'may' instead of 'shall' in Section 144B (7) meant that there was no absolute right for the petitioner to claim a personal hearing.

Upon considering the arguments, the Court referred to Section 144B (7) and Section 144B (9) of the Act, which provide for the opportunity of a personal hearing if requested by the assessee. Citing a previous judgment, the Court emphasized that the use of 'may' did not absolve the revenue authority from considering requests for personal hearings. The Court noted that no standards, procedures, or processes had been framed for dealing with such requests, highlighting the revenue's failure to address the petitioner's repeated requests for a personal hearing.

Consequently, the Court held that the failure to grant a personal hearing before passing the assessment order amounted to a violation of natural justice and the mandatory procedures of the Faceless Assessment Scheme outlined in Section 144B of the Act. The Court set aside the impugned assessment order dated 31st May 2021 and remanded the matter back to the Assessing Officer. The Assessing Officer was directed to provide the petitioner with an opportunity for a hearing via Video Conferencing and subsequently pass a reasoned order in accordance with the law.

In conclusion, the Court ruled in favor of the petitioner, emphasizing the importance of adhering to procedural fairness and the principles of natural justice in assessment proceedings under the Income Tax Act, 1961.