2024 (12) TMI 318 - HC - Income Tax

Validity of Faceless assessment - denial of opportunity for personal hearing through video conferencing - HELD THAT - In the present case, the petitioner assessee has specifically requested for personal hearing through video conferencing. It may be true that in the online mode the assessee had not exercised the option. That is not a ground to deny the opportunity of hearing when the statute provides otherwise and no standards, procedures and processes for approving the request for personal hearing have been framed by the competent authority. In the present case, admittedly, the assessee specifically made request for a personal hearing, which has not been considered. Therefore, there has been violation of the principles of natural justice, and hence, the petitioner has rightly invoked the provisions of Article 226 of the Constitution. Having regard to the facts and circumstances, the statutory authority was bound to afford a personal hearing to the petitioner through video conferencing as mentioned above. The result of this infraction would be that the impugned orders will have to be set aside.

Summary

Issues:
Challenge to assessment order for Assessment Year 2018-19 based on lack of opportunity for personal hearing through video conferencing as per Income Tax Act, 1961.

Analysis:
The petitioner, a Banking Company, challenged an assessment order by the Income Tax Department for the Assessment Year 2018-19. The petitioner contended that the assessment order was passed without affording an opportunity for a personal hearing through video conferencing, as mandated by Section 143(3) of the Income Tax Act. The petitioner argued that under Section 144B (7) (vii), if a variation is proposed in the draft assessment order, the assessee has the right to request a personal hearing to present their case. The petitioner relied on a notification issued by the Ministry of Finance in support of this contention.

The respondents argued that the petitioner had the option to apply for a hearing through video conferencing when the show cause notice was issued, but the petitioner only filed a written reply without opting for a personal hearing. The respondents contended that the Faceless Assessing Officer (FAO) cannot initiate a personal hearing, and it was the assessee's responsibility to request it. The respondents also highlighted the availability of the statutory remedy of appeal under Section 246A of the Income Tax Act.

The Court noted that the Central Government had introduced a scheme for 'faceless assessment' to enhance efficiency and transparency in assessment proceedings. However, the Court emphasized that the petitioner's specific request for a personal hearing through video conferencing should have been considered, especially since no standards or procedures for approving such requests had been framed by the competent authority. The Court stressed the importance of adherence to principles of natural justice, emphasizing that no one should be condemned unheard.

In conclusion, the Court found that there was a violation of the principles of natural justice as the petitioner's request for a personal hearing was not considered. The Court held that the impugned orders must be set aside, and the statutory authorities were directed to pass fresh assessment orders after affording the petitioner a personal hearing through video conferencing. The Court allowed the writ petition in favor of the petitioner.