2024 (9) TMI 970 - HC - Income Tax

Validity of Assessment Order - lack of opportunity for a video conference hearing as a breach of natural justice. HELD THAT - It is not in dispute that there is no adherence to the principles of natural justice by not providing opportunity of personal hearing to the petitioner before passing the impugned assessment order. It is true that for the Assessment Year under consideration i.e. 2018 19 there was no mandatory requirement for providing video conferencing. However, as the respondents have approved the video conferencing for the petitioner and on two earlier occasions, such video conferencing could not take place due to the technical difficulties on the part of the respondent Department, it was incumbent upon the respondent Department to provide video conferencing before passing the impugned Assessment Order to comply with the principles of natural justice. Thus, without entering into the merits of the matter, we quash and set aside the impugned Assessment Order passed by the respondent Authority under Section 143 (3) read with Section 144B of the Act and remand the matter back to the respondent AO to pass a fresh de novo order after providing a fresh opportunity of hearing through video conferencing to the petitioner in accordance with law.

Summary

Issues:
Challenge to Assessment Order for Assessment Year 2018-19 on the ground of lack of opportunity of hearing through video conference.

Analysis:
The petitioner challenged the Assessment Order dated 20.09.2021 for the Assessment Year 2018-19 under Section 143 (3) read with Section 144B of the Income Tax Act, 1961, citing lack of opportunity for a video conference hearing as a breach of natural justice. The petitioner's income declaration was scrutinized, and a show-cause notice proposing a substantial addition under Section 68 of the Act was issued. Despite the petitioner's detailed replies and requests for a video conference hearing, technical difficulties and miscommunications led to failed attempts at conducting the hearing.

The petitioner contended that despite their efforts to explain the situation and request a new video conference hearing, the Assessment Order was passed without further communication, reiterating the proposed addition. The petitioner argued that the principles of natural justice required the order to be quashed and the matter to be remanded for a fresh hearing through video conferencing to ensure a fair opportunity for the petitioner to present their case.

The respondent, represented by Senior Standing Counsel, argued that the petitioner had been provided with sufficient opportunities for a video conference hearing, as evidenced by the intimation containing the password for the scheduled conference. The respondent claimed that the petitioner's failure to join the conference on the specified date was not due to a lack of password, contradicting the petitioner's assertions.

The Court observed that the respondent Department failed to respond to the petitioner's submissions after the failed video conference attempt, indicating a lack of communication and effort to rectify the situation. Despite no mandatory requirement for video conferencing for the relevant assessment year, the Court held that since the option was approved for the petitioner and previous attempts were unsuccessful due to technical issues on the respondent's end, providing a fair opportunity for a video conference hearing was necessary to uphold the principles of natural justice.

Therefore, the Court quashed the Assessment Order dated 20.09.2021 and remanded the matter to the Assessing Officer to conduct a fresh hearing through video conferencing within 12 weeks, emphasizing the importance of adhering to principles of natural justice in the assessment process.