2021 (9) TMI 324 - HC - Income Tax

Faceless assessment u/s 144B - Natural Justice Principles' NJP - SCN issued calling upon writ petitioner-assessee's response by 59 minutes post 23.00 hours on 26.07.2021 - HELD THAT - A clear and indisputable violation of NJP is a certain exception to the Rule and the case on hand directly and squarely fits into this exception owing to the narrative set out thus far. In this regard, as already alluded to, Tin Box Company 2001 (2) TMI 13 - SUPREME COURT Case law becomes relevant it comes to the aid of the writ petitioner in the case on hand owing to the factual matrix and the most relevant paragraph in Tin Box case law The above buttresses the principle that in a given case of indisputable NJP violation i.e., aforementioned facet of NJP, availability of statutory appeal argument pales into insignificance. With regard to the third point which turns on Section 144B(7)(viii), this Court refrains itself from expressing any opinion on the same at this point of time as I only propose to relegate the matter for assessment afresh after considering the writ petitioner-assessee's response, which has not been done qua the impugned order. Therefore, when the response of writ petitioner-assessee is considered, it will include considering the writ petitioner-assessee's request for a personal hearing. This much clarity will suffice and any further elaboration would be unnecessary as that would only burden this order with particulars that are not imperative for appreciating this order. The Impugned Assessment order is set aside solely on the ground of non adherence to statutorily ingrained NJP principle; - Assessing Authority directed to do de novo exercise.

Summary

Issues:
1. Validity of the assessment order under Section 143(3) of the Income Tax Act, 1961 read with Section 144B.
2. Compliance with natural justice principles in the issuance of show cause notices and response timelines.
3. Availability of statutory appeal under Section 246A of the IT Act.
4. Discretionary power for a personal hearing under Section 144B(7)(viii).

Analysis:

Issue 1: Validity of the assessment order under Section 143(3) of the Income Tax Act, 1961 read with Section 144B:
The case revolved around an assessment order dated 06.08.2021 challenged in a writ petition under Certiorari. The order was made under Section 143(3) of the Income Tax Act, 1961, read with Section 144B, which came into effect on 01.04.2021. The petitioner-assessee responded to show cause notices and requested a personal hearing, highlighting the compliance with procedural requirements under the Act.

Issue 2: Compliance with natural justice principles in the issuance of show cause notices and response timelines:
The main contention was the alleged failure of the assessing authority to consider the responses filed by the petitioner-assessee to the show cause notices. The court emphasized the importance of natural justice principles and highlighted the necessity for the assessing authority to provide a reasonable opportunity for the assessee to present their case. The court referred to relevant case law to support the argument that a clear violation of natural justice principles constitutes an exception to the rule of exhausting statutory appeal remedies.

Issue 3: Availability of statutory appeal under Section 246A of the IT Act:
The court acknowledged the existence of a statutory appeal provision under Section 246A of the IT Act but emphasized that in cases of indisputable violation of natural justice principles, the availability of a statutory appeal becomes less significant. The court cited precedents to support the exception to the rule of exhausting alternate remedies in cases of clear violations of natural justice principles.

Issue 4: Discretionary power for a personal hearing under Section 144B(7)(viii):
The court refrained from expressing a definitive opinion on the discretionary power for a personal hearing under Section 144B(7)(viii) at that point. Instead, the court directed a fresh assessment to be conducted, considering the petitioner's responses and request for a personal hearing. The court set a deadline for the completion of the reassessment process, emphasizing the need for expeditious resolution within the statutory framework.

In conclusion, the court set aside the impugned assessment order solely on the ground of non-adherence to natural justice principles, directing a de novo assessment to be completed within a specified timeline. The judgment highlighted the significance of procedural fairness and the duty of the assessing authority to afford the assessee a reasonable opportunity to present their case.