2022 (11) TMI 780 - HC - Income Tax

Validity of faceless assessment u/s 144B - Assessee argued not being granted a fair opportunity of hearing in the course of the assessment being made - HELD THAT - This court is of the opinion that in the instant case also though the petitioner did move an application requesting for a personal hearing on the first day itself on which she was supposed to make her submissions, the impugned order is silent as to why the said request was not considered or why the authorities did not find it proper or necessary for giving an opportunity of hearing to the petitioner. Thus, this court is of the firm view that the principles of natural justice to the aforesaid extent, particularly when the Act itself provides for a procedure for the same, stands violated. The impugned assessment order Annexure P/1, dated 29.09.2022, for the aforesaid reason stands set aside/quashed and the matter stands remitted back to the assessment authority for a fresh consideration after giving an opportunity of personal hearing to the petitioner in accordance with Section 144B(6)(vii) (viii) of the Act of 1961. This court fixes 01.12.2022 for making the petitioner herself available before the Assessment Authority who by that time shall take necessary steps in ensuring all arrangements to be made for personal hearing to be given to the petitioner in respect of the assessment under challenge in the present writ petition. After giving a reasonable opportunity of hearing to the petitioner the authority may pass a fresh order. This court while allowing the writ petition has not entered into the merits of the assessment made by the assessing authority. The authority would be free to take an appropriate decision after hearing the petitioner.

Summary

Issues Involved:
1. Whether the petitioner was denied a fair opportunity of hearing during the assessment process.
2. Whether the writ petition should be entertained despite the availability of an appeal remedy.
3. Compliance with Section 144B(6)(vii) & (viii) of the Income Tax Act, 1961 regarding personal hearing requests.

Detailed Analysis:

1. Denial of Fair Opportunity of Hearing:
The petitioner filed a writ petition challenging the assessment order dated 29.09.2022 under Section 143 read with Section 144B of the Income Tax Act, 1961, on the grounds of not being granted a fair opportunity of hearing. The petitioner had requested a personal hearing through Video Conferencing via an application dated 26.09.2022, which was acknowledged by the Department. However, the assessment authority proceeded with the assessment without providing the requested hearing, violating Section 144B(6)(vii) & (viii) of the Act, which mandates granting a hearing upon request. The court referenced several judgments, including those from the Bombay, Gujrat, and Delhi High Courts, which emphasized the mandatory nature of providing personal hearings when requested, as a part of upholding the principles of natural justice.

2. Entertaining the Writ Petition Despite Appeal Remedy:
The Department argued that the writ petition should not be entertained as the assessment order is appealable under Section 246A of the Act. However, the court decided to entertain the writ petition solely on the ground of potential violation of the principles of natural justice. The court cited precedents where the Supreme Court and other High Courts held that judicial review is permissible when there is a violation of natural justice principles, even if an appeal remedy exists.

3. Compliance with Section 144B(6)(vii) & (viii):
The court analyzed Section 144B(6)(vii) & (viii) of the Income Tax Act, which requires the assessing authority to allow a personal hearing through Video Conferencing upon request. The court noted that the petitioner had made a timely request for a personal hearing, which was not entertained by the authorities without any assigned reason. The court referenced multiple judgments from various High Courts which held that the requirement for providing a personal hearing is mandatory, not merely directory. The judgments stressed that failure to grant such a hearing constitutes a violation of the principles of natural justice, rendering the assessment order liable to be set aside.

Conclusion:
The court concluded that the principles of natural justice were violated as the petitioner was not granted a personal hearing despite a valid request. Consequently, the assessment order dated 29.09.2022 was set aside, and the matter was remitted back to the assessment authority for fresh consideration after providing a reasonable opportunity of personal hearing to the petitioner as per Section 144B(6)(vii) & (viii) of the Income Tax Act, 1961. The court fixed 01.12.2022 for the petitioner to be available before the Assessment Authority for the hearing. The court clarified that it did not delve into the merits of the assessment itself, allowing the authority to make a fresh decision post-hearing. The writ petition was allowed to the extent of ensuring compliance with the procedural requirements for a fair hearing.