2023 (8) TMI 1120 - HC - Income Tax

Validity of Faceless Assessment - Penalty u/s 271(1)(c) - ignorance of an assessee as to his rights - Addition of cash credit u/s 68 - Non providing opportunity of hearing to the petitioner through video conferencing - whether mere non-filing of return of income is not a valid ground for denial of relief available to the petitioner under Section 10(23C)? - variation between total cash deposits in bank accounts and available cash generated through student fees - HELD THAT - As this Court finds that the assessment order dated 18.03.2023 is prejudicial to the interest of the writ petitioner. The opportunity of personal hearing could not be availed due to technical difficulties and for such technical fault the petitioner cannot be made to suffer. No incontestable evidence is provided by the respondent authority to show that the request of the petitioner for providing opportunity of personal hearing by video conferencing was complied with or that the request of the petitioner was considered after pointing out such technical fault in the system. The petitioner is a West Bengal Government aided college duly affiliated under the Calcutta University enjoying relief under Section 10 (23C) of the Act but not conversant with the Income Tax e-proceeding facilities . The situation being such the respondent authority has to consider the plight of the petitioner in the light of departmental circular No. 14(XL-35) dated 11.04.1995. The impugned assessment order and notice of penalty is set aside. The matter is remanded to the concerned assessing officer to pass a fresh assessment order in accordance with law after giving an opportunity of hearing to the petitioner through video conferencing by providing a proper link. WA allowed.

Summary

Issues involved:
The issues involved in this case are challenging the assessment order under Section 147 of the Income Tax Act 1961, notice of penalty under Section 274, and discrepancies in the assessment proceedings.

Assessment Order Challenge:
The petitioner, a West Bengal Government aided college, challenged the assessment order dated 18.03.2023, which treated an amount as cash credit under Section 68 of the Act. The petitioner contended that the assessment was made without providing an opportunity of hearing despite submitting necessary documents and evidence. The petitioner repeatedly requested for a personal hearing through video conferencing, but the authorities did not consider these requests. The petitioner argued that the assessment order violated principles of natural justice and was in contravention of Section 144B of the Act and SoP under Faceless Assessment provisions.

Penalty Imposition:
A notice of demand under Section 156 of the Act was issued demanding an amount from the petitioner. Additionally, a notice for penalty under Section 274 read with Section 271(1)(c) and Section 271F was imposed for alleged concealment of income and failure to furnish a return of income. The petitioner contended that non-filing of the income tax return should not be a ground for denying relief under Section 10(23C) of the Act. The petitioner argued that the assessment order and penalty imposition were not in compliance with the procedural requirements under the Act.

Court's Decision:
After hearing arguments from both parties, the Court found that the assessment order was prejudicial to the petitioner's interest as the opportunity for a personal hearing was not availed due to technical difficulties. The Court noted that no clear evidence was provided by the respondent authority to show that the petitioner's request for a personal hearing through video conferencing was considered. The Court referred to administrative instructions emphasizing the duty of officers to assist taxpayers in claiming reliefs and refunds. Consequently, the Court set aside the assessment order and the notice of penalty, remanding the matter to the assessing officer for a fresh assessment order in accordance with the law, providing the petitioner with an opportunity of hearing through video conferencing by providing a proper link.

Conclusion:
The High Court of Calcutta allowed the writ application, directing the concerned assessing officer to conduct a fresh assessment order after providing the petitioner with a proper opportunity of hearing through video conferencing. The impugned assessment order and notice of penalty were set aside, with no order as to costs.