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2022 (1) TMI 1106 - HC - Income TaxValidity of order u/s 143(3) read with section 260 - Penalty proceedings u/s 270A and 271AAC - personal hearing was rejected as there is no legal aspect to be heard and that the proposed additions are a matter of fact. - HELD THAT - This Court in the case of Bharat Aluminium Company Ltd. 2022 (1) TMI 658 - DELHI HIGH COURT has held that the use of the expression may in Section 144B(7)(VIII) is not decisive. Where a discretion is conferred upon a quasi judicial authority whose decision has civil consequences, the word may which denotes discretion should be construed to mean a command. Consequently, requirement of giving an assessee a reasonable opportunity of personal hearing is mandatory. It was further held that the classification made by the Respondent between the matters involving disputed questions of fact and questions of law by way of the Circular dated 23 rd November, 2020 is not legally sustainable. Consequently, the impugned assessment order, the demand noticeand the penalty proceedings under Sections 270A and 271AAC of the Act for the assessment year 2018-19 are quashed and the matter is remanded back to Respondent No.2 for a fresh decision, in accordance with law.
Issues:
Challenge to assessment order, demand notice, and penalty proceedings under Income Tax Act for Assessment Year 2018-19. Disregard of court's order for personal hearing via video conferencing. Rejection of personal hearing request by Respondents. Timing discrepancy between notice of demand and assessment order. Legality of Respondents' rejection based on CBDT Circular. Interpretation of the word "may" in Section 144B(7)(VIII) regarding personal hearing requirement. Analysis: The petitioner filed a writ petition challenging the assessment order, demand notice, and penalty proceedings under the Income Tax Act for the Assessment Year 2018-19. The petitioner contended that the impugned orders violated a previous court order directing a personal hearing through video conferencing, which the Respondents failed to provide. The Respondents rejected the request for a personal hearing, citing no legal aspect to be heard and that the proposed additions were factual. The timing discrepancy between the notice of demand and the assessment order raised concerns that the decision was predetermined by the Respondents. The Respondents defended the rejection of the personal hearing request by referring to a CBDT Circular from 2020, stating that personal hearings would only be granted in cases involving disputed questions of fact. However, the court referred to a previous judgment where it was held that the requirement of giving an assessee a reasonable opportunity of personal hearing is mandatory, regardless of the nature of the questions involved. The court found the classification made by the Respondents based on the Circular to be legally unsustainable. Ultimately, the court quashed the assessment order, demand notice, and penalty proceedings for the assessment year 2018-19, remanding the matter back to the Respondent for a fresh decision in accordance with the law. The court emphasized the mandatory nature of providing a reasonable opportunity for a personal hearing to the assessee. The writ petition and application were disposed of, leaving the rights and contentions of all parties open for further proceedings.
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