2022 (3) TMI 1352 - HC - Income Tax

Assessment u/s 144B - Faceless Assessment - request for personal hearing or to make oral submissions, on approval of the request, the personal hearing shall be conducted exclusively through Video Conferencing was not honoured - HELD THAT - It is clear from the procedure prescribed u/s 144B(7)(vii viii) that in the event of any variation proposed in the draft assessment order or final draft assessment order, the assessee is to be granted an opportunity by serving a notice to show cause and that if the assessee requests for personal hearing, the same is to be considered by the Chief Commissioner or Director General In-charge and the Regional Faceless Assessment Centre. Circular providing Standard Operating Procedure for personal hearing through Video Conferencing under the Faceless Assessment Scheme, 2019 vide Circular bearing F.No.PR.CCIT/NeAC/SOP/2020-21 dated 23.11.2020 clarifies this position. Accordingly, when the petitioner makes such request for personal hearing, the same must be provided to the petitioner. As observed by Delhi High Court, the use of the word 'may' u/s 144B is to be construed as 'shall', if otherwise the requirements under the said Circular are complied with. Accordingly, on this ground itself, the Assessment order at Annexure-A dated 09.09.2021 and the Computation Sheet at Annexure-B dated 09.09.2021 and the Demand Notice at Annexure-C dated 09.09.2021 are hereby set aside

Summary

Issues:
Challenge to Assessment Order, Computation Sheet, and Demand Notice for Assessment Year 2018-2019 under Income Tax Act, 1961 - Denial of opportunity for personal hearing through Video Conferencing.

Analysis:
The petitioner sought to quash the Assessment Order, Computation Sheet, and Demand Notice dated 09.09.2021 for the Assessment Year 2018-2019, contending that the show cause notice allowed for a personal hearing through Video Conferencing upon request. The petitioner's request for a personal hearing was not honored, and the Assessment Order was passed without providing the opportunity for a personal hearing.

The petitioner argued that the denial of a personal hearing was contrary to law and established procedures, citing Section 144B(7)(vii & viii) of the Income Tax Act and a Circular providing for personal hearings through Video Conferencing under the Faceless Assessment Scheme, 2019. Reference was made to judgments by the High Court of Delhi and the High Court of Bombay, emphasizing that a personal hearing is mandatory when requested.

The Revenue contended that justifying circumstances are necessary for granting a personal hearing under the Standard Operating Procedure. However, the court noted that Section 144B of the Income Tax Act mandates granting an opportunity for a personal hearing upon request, as clarified by the Circular on the Standard Operating Procedure for personal hearings through Video Conferencing.

The court observed that the use of the word 'may' in Section 144B should be construed as 'shall' if the Circular's requirements are met. Consequently, the court set aside the Assessment Order, Computation Sheet, and Demand Notice, directing the respondent Authority to provide the petitioner with a personal hearing through Video Conferencing in accordance with the Circular and to proceed with the matter accordingly.