2023 (2) TMI 29 - HC - Income Tax

Proceedings u/s 144B - best judgment assessment on the count that the petitioner did not file the return of income in response to the notice u/s 148 - as argued variation be not made without availing an opportunity or replying to the request of the petitioner - HELD THAT - It is not being disputed that the opportunity of hearing is not granted. On the basis of the information received in respect of assessee, verification of material received from DDIT (Inv.) Unit-1(3), assessing officer has finalized the assessment order dated 12.3.2022, which is impugned in the instance case. This being a clear violation of procedure laid down under Section 144B (9), the order is non-est in the eyes of law and hence, the petition is allowed quashing and setting aside the order of assessment. The officer concerned shall take up the matters from the stage where the request was made for availing the opportunity of hearing. Let within two weeks the request be made on the part of the petitioner which shall be responded by the officer concerned within two weeks. The entire process of adjudicating the matter shall be completed within twelve weeks period. This disposal shall not come in the way of the either side.

Summary

Issues:
Violation of opportunity of hearing under Section 144B of the Income-Tax Act, 1961 leading to an impugned assessment order and demand under Section 156.

Analysis:
The petitioner filed the income return for the assessment year 2017-2018 but received a draft assessment order from respondent No.1 invoking powers under Section 144 of the Income-Tax Act, 1961 due to alleged failure to file a return in response to a notice under Section 148. The petitioner requested a personal hearing via video conference before any adverse inference. Despite this, a show cause notice was issued, and an assessment order demanding Rs. 27,17,566 was passed without granting the opportunity of hearing. The petitioner contended that Section 144B entitles them to a hearing, including through video conference, which was ignored by the respondent, leading to the petition with prayers to quash the assessment order.

The High Court found that the assessment order was a clear violation of the procedure laid down under Section 144B(9) as the opportunity of hearing was not granted. Consequently, the order was deemed non-est in the eyes of the law, and the petition was allowed, quashing and setting aside the assessment order. The Court directed the officer concerned to resume the process from the stage where the hearing request was made. The petitioner was instructed to make the request within two weeks, to which the officer must respond within the same period. The entire adjudication process was mandated to be completed within twelve weeks from the judgment date.

The Court emphasized that its decision did not delve into the merits of the case and that the matter should be decided accordingly in the future proceedings. The disposal of the petition was not to obstruct either party, ensuring that the resolution of the matter continues as per due process.