2022 (12) TMI 701 - HC - Income Tax

Faceless Assessment u/s 144B - Comparative study of the pre-amendment Section 144B and post-amendment Section 144B - violation of principle of natural justice - not providing opportunity of hearing to the petitioner giving no response to the request made by the petitioner for grant of opportunity of hearing through video conferencing - HELD THAT - Having noticed that the request was made by the petitioner for personal hearing in the matter on receipt of the show cause notice-cum-draft assessment order, the action of the respondent in not providing opportunity of hearing to the petitioner giving no response to the request made by the petitioner for grant of opportunity of hearing through video conferencing resulted in violation of the principles of natural justice. The assessment order records that the assessee had submitted a reply - The request for personal hearing appears to have been acknowledged on 29.3.2022. The assessment order, however, does not indicate that any personal hearing was granted to the petitioner on or before 30.3.2022. It also does not record any reason for denial of opportunity of hearing to the petitioner. In faceless assessment procedure set in place w.e.f. 1.4.2022 by amendment in Section 144B(7), the personal hearing through video conferencing has been made mandatory, in case of the request made by the assessee. Thus having noticed that the petitioner herein had participated at every stage of the proceeding and submitted reply to the notices issued to him from time to time, the reply to the show cause-cum-draft assessment order dated 28.3.2022 given by the assessee runs into about 20 pages. The petitioner had specifically asked for grant of opportunity of personal hearing through video conferencing by communication on the website and the said request had been acknowledged by the respondent authorities. We, however, do not find any good reason for denial of such an opportunity to the petitioner herein. Personal opportunity of hearing was not granted to the petitioner, we do not find any good reason to grant any time to file response/counter affidavit. The impugned assessment order is, thus, found to be in violation of the principles of natural justice and against the procedure set in place for conducting reassessment proceeding. Being deficit in essential procedural compliances, the assessment order dated 30.3.2022 is hereby set aside. The matter is remitted back to the competent authority/National Faceless Assessment Centre for passing fresh assessment order after providing due opportunity of hearing to the petitioner by fixing a date for personal hearing through video conferencing on receipt of the copy of this order.

Summary

Issues Involved:
1. Validity of the assessment order dated 30.3.2022 for the assessment year 2013-14.
2. Impact of the omission of Section 144B(9) by the Finance Act, 2022.
3. Requirement of notice issuance by the National Faceless Assessment Centre.
4. Denial of personal hearing and violation of principles of natural justice.

Detailed Analysis:

1. Validity of the Assessment Order:
The petitioner challenged the assessment order dated 30.3.2022 for the assessment year 2013-14, arguing that it was passed without granting a personal hearing, thus violating the principles of natural justice. The petitioner had filed a return of income and revised it, following which a notice under Section 148 was issued. The petitioner responded and filed objections challenging the jurisdiction of the assessing officer. Despite requesting a personal hearing through video conferencing, the petitioner received no response, leading to the impugned assessment order being passed without an oral hearing.

2. Impact of the Omission of Section 144B(9):
The petitioner argued that the omission of Section 144B(9) by the Finance Act, 2022, which was given retrospective effect from 1.4.2021, was unconstitutional. Section 144B(9) provided that any assessment not made in accordance with the procedure laid down would be non-est in law. The petitioner contended that this provision was a safeguard against arbitrary assessments and its omission would encourage arbitrary exercise of power. The court, however, noted that amendments relating to procedure are presumed to be retrospective and that the omission was aimed at streamlining the faceless assessment process to reduce litigation and procedural difficulties.

3. Requirement of Notice Issuance by the National Faceless Assessment Centre:
The petitioner contended that the notice under Section 143(2) should have been issued by the National Faceless Assessment Centre, as mandated by the faceless assessment procedure introduced by Section 144B. However, the notice was issued by the Assistant Commissioner of Income Tax, Faizabad. The court observed that the assessment proceedings were conducted under the Faceless Assessment Scheme-2019 and that the notice issued by the Assistant CIT did not suffer from any error of law since all subsequent proceedings were conducted through the National Faceless Assessment Centre.

4. Denial of Personal Hearing and Violation of Principles of Natural Justice:
The petitioner argued that the denial of a personal hearing, despite a specific request, violated the principles of natural justice. The court noted that the request for a personal hearing was acknowledged but not granted. The assessment order did not record any reason for the denial of the hearing. The court emphasized that personal hearing through video conferencing has been made mandatory in faceless assessment procedures if requested by the assessee. The failure to provide a personal hearing rendered the assessment order procedurally deficient and in violation of natural justice principles.

Conclusion:
The court set aside the assessment order dated 30.3.2022, finding it to be in violation of the principles of natural justice due to the denial of a personal hearing. The matter was remitted back to the competent authority/National Faceless Assessment Centre to pass a fresh assessment order after providing the petitioner with an opportunity for a personal hearing through video conferencing. The petitioner was directed to cooperate in the proceedings and not seek unnecessary adjournments. The writ petition was allowed to this extent.