2021 (12) TMI 1219 - HC - Income Tax

Validity of assessment u/s 144B - main contention of the Petitioner as denied the opportunity of personal hearing before passing the assessment order - HELD THAT - As Petitioner had made an oral request for personal hearing. However, the said request was turned down without assigning any reason. It is, in these circumstances and to comply with Section 144B the Petition deserves to be allowed and remitted back to the Respondent No.1. The following order is passed Assessment Order dated 17/8/2021, passed under Section 143(3) r/w Section 144B of the Income Tax Act, 1961 passed by the National Faceless Centre is, hereby, quashed and set aside. The matter is remanded to the Respondent No.1 to complete the assessment proceedings by following due procedure as contemplated by Section 144B of the the Income Tax Act, 1961.

Summary

Issues:
Challenge to notice of demand under Section 156 of the Income Tax Act, 1961 for Assessment Year 2018-19.
Denial of opportunity of personal hearing before passing the assessment order under Section 143(3) and Section 144B of the IT Act.

Analysis:
1. The petitioner, Goa Industrial Development Corporation (GSIDC), challenged a notice of demand under Section 156 of the Income Tax Act, 1961, seeking a demand of ?18,92,96,072 for the Assessment Year 2018-19. The petitioner contended that the assessment was modified to provide benefits under Section 11 of the IT Act following a High Court judgment, but the Income Tax Officer still issued the demand without proper consideration.
2. The petitioner argued that the principles of natural justice were violated as no opportunity for personal hearing was granted before passing the assessment order. The petitioner highlighted the importance of complying with Section 144B of the IT Act, which allows the assessee to request a personal hearing in case of a proposed variation prejudicial to them.
3. The High Court referred to previous judgments emphasizing the mandatory nature of faceless assessment procedures under Section 144B of the IT Act. The court held that neglecting procedural safeguards would render the assessment invalid. The petitioner relied on cases where orders passed without following the Faceless Assessment Scheme were quashed.
4. The Respondent contended that the assessment order was passed after providing adequate opportunity to the assessee and considering their submissions. The Respondent argued that the petitioner's declared income justified the assessment order and that the additional income from house property was correctly included in the total income assessed.
5. The court ultimately quashed and set aside the assessment order dated 17/8/2021 passed by the National Faceless Centre, remanding the matter back to the Respondent to complete the assessment proceedings following the due procedure under Section 144B. The court directed the Respondent to provide the petitioner with a personal hearing through video-conferencing and complete the assessment within 3 months from the date of the order.

This detailed analysis covers the issues raised in the legal judgment comprehensively, outlining the arguments presented by both parties and the court's final decision.