2024 (9) TMI 871 - HC - Income Tax

Validity of assessment order passed without affording an opportunity of hearing - appeal provided from the order, which has not been availed of - Petitioner only seeks for a remand so that an opportunity be afforded for a proper hearing - HELD THAT - Under the scheme of the Income Tax Act, specifically after the faceless assessment was brought into force, a request has to be made for an oral hearing. There is a specific option provided, which has to be ticked in the affirmative, to make the request while uploading the objection. Unless the request is made, the faceless assessment would be concluded without an oral hearing, which again is as per the scheme of the Act. We do not think that the dictum of the Full Court applies here. We also notice that there is a provision for appeal where all the facts can be argued in person. The appellate authority also has sufficient power to get a report from the AO, after affording an opportunity of hearing before the AO. The High Court, can always refuse the exercise of discretion if there is an adequate and effective remedy elsewhere. High Court can exercise the power only if it comes to the conclusion that there has been a breach of principles of natural justice or due procedure required for the decision has not been adopted - High Court would also interfere if it comes to a conclusion that there is infringement of fundamental rights or where there is failure of principles of natural justice or where the orders and proceeding are wholly without jurisdiction or when the vires of an Act is challenged. The plea made of no oral hearing afforded has to be considered in the context of the option not having been exercised; which amounts to a waiver. We, however, reserve the liberty of the petitioner to approach the appellate authority. The period during which the writ petition, was filed from 20.04.2024, till today, shall not be reckoned as delay.

Summary

Issues:
1. Assessment order passed without affording an opportunity of hearing.
2. Interpretation of provisions regarding oral hearing under the Wealth Tax Act and the Income Tax Act.
3. Applicability of faceless assessment procedures under the Income Tax Act.
4. Jurisdiction of High Court under Article 226 of the Constitution regarding alternate remedies and principles of natural justice.

Analysis:
The petitioner challenged an assessment order passed without a hearing. The petitioner sought a remand for a proper hearing, citing a Full Bench decision interpreting Section 18(2) of the Wealth Tax Act, emphasizing the requirement of an oral hearing. The Full Bench clarified that "heard" means to be heard "orally," and there is an implied obligation to offer an oral hearing under the Wealth Tax Act, even without a request. However, the Court noted the provision under Section 144B(vii) of the Income Tax Act post faceless assessment, which mandates a request for an oral hearing. The Court concluded that under the faceless assessment scheme, an oral hearing must be requested, and without such a request, the assessment would proceed without one, aligning with the Act's provisions.

The Court considered the jurisdiction under Article 226 of the Constitution to interfere with appellable orders, citing precedents emphasizing the discretionary nature of writ remedies. It was highlighted that the High Court can refuse to exercise discretion if an adequate alternative remedy exists. The Court clarified that interference is warranted only in cases of breach of natural justice principles, fundamental rights infringement, lack of jurisdiction, or when challenging an Act's vires. The Court noted that the failure to request an oral hearing amounted to a waiver, and the petitioner was reserved the liberty to approach the appellate authority.

Ultimately, the Court dismissed the writ petition, emphasizing that the period during the petition filing till the judgment would not be considered a delay. The judgment underscored the importance of adhering to procedural requirements and the availability of appellate remedies, while also outlining the discretionary nature of the High Court's jurisdiction under Article 226.