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TMI Blog2022 (1) TMI 658X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondent/Revenue that personal hearing would be allowed only in such cases which involve disputed questions of fact is untenable as cases involving issues of law would also require a personal hearing. This Court is of the view that the classification made by the respondents/Revenue by way of the Circular dated 23rd November, 2020 is not legally sustainable as the classification between fact and law is not founded on intelligible differentia and the said differentia has no rational relation to the object sought to be achieved by Section 144B of the Act. Also, if the argument of the respondent/Revenue is accepted, then this Court while hearing an appeal under Section 260A (which only involves a substantial question of law) would not be obliged in law to grant a personal hearing to the counsel for the Revenue. This Court is of the opinion that an assessee has a vested right to personal hearing and the same has to be given, if an assessee asks for it. The right to personal hearing cannot depend upon the facts of each case. Impugned final assessment order and impugned notice issued by respondent No.3 to the petitioner are set aside and the matter is remanded back to the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xv) provides for issuance of draft assessment order to the assessee after considering the reply to Show Cause Notice. He emphasized that in the present case, respondent No.3 issued a Show Cause Notice under Section 144B(1)(xvi) proposing Null or Nil variation and the petitioner duly confirmed the same vide letter dated 16th September, 2021. However, thereafter, respondent No.3 took a complete turnaround and issued the draft assessment order proposing variations for which no Show Cause Notice was ever issued to the petitioner. 5. He pointed out that this Court in multiple cases, including Rani Promoter Pvt. Ltd. vs. Additional Commissioner of Income Tax [2021 (7) TMI 919-Delhi High Court] and Toplight Corporate Management (P.) Ltd. vs. National Faceless Assessment Centre Delhi [(2021) 128 taxmann.com 221 (Delhi)], has unequivocally held that issuance of Show Cause Notice, mentioning the proposed additions under Section 144B(xvi), is a mandatory requirement and any assessment order passed without issuance of such Show Cause Notice is bad in law. He even stated that in the instant case, the Show Cause Notice, referred to in the final Assessment Order, was never served upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot only frustrate the entire concept of Faceless Assessment Scheme but would also defeat the very purpose for which this Scheme was brought about by the Legislature. He pointed out that the Legislature, in its own wisdom, had provided for a mechanism for grant of personal hearing in deserving cases falling in the category of Section l44B of the Act itself. The relevant portion of Section 144B of the Act, relied upon by learned counsel for respondents/Revenue, is reproduced hereinbelow:- 144B. Faceless assessment: (7)(vii) in a case where a variation is proposed in the draft assessment order or final draft assessment order or revised draft assessment order, and an opportunity is provided to the assessee by serving a notice calling upon him to show cause as to why the assessment should not be completed as per the such draft or final draft or revised draft assessment order, the assessee or his authorized representative, as the case may be, may request for personal hearing so as to make his oral submissions or present his case before the income-tax authority in any unit; (viii) the Chief Commissioner or the Director General, in charge of the Regional Faceless Assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. (emphasis supplied) 11. Therefore, according to him, the personal hearing is discretionary. He emphasised that under faceless assessment under Section 144B of the Act, the assessee does not have a vested right to personal hearing and the same could be granted depending upon the individual facts of each case and fulfilling of the conditions laid down in SOP dated 23rd November, 2020. COURT S REASONING THIS COURT IS UNABLE TO COMPREHEND AS TO HOW DESPITE NIL OR NULL VARIATION PROPOSED IN THE SHOW CAUSE NOTICE, THE IMPUGNED FINAL ASSESSMENT ORDER AND NOTICE MAKES A DEMAND OF ₹ 1,69,77,44,240/-. 12. Having heard learned counsel for the parties, this Court is unable to comprehend as to how despite Nil or Null variation proposed in the show cause notice, additions had been made to the assessed income in the draft Assessment Order and the final Assessment Order. Infact, while the show cause notice assessed a total loss of ₹ 1,76,94,91,428/-, the impugned final assessment order and notice makes a demand of ₹ 1,69,77,44,240/- as if the petitioner made a super profit! 13. Further, no Show Cause Notice, as mandatorily required by Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment made under section 143(3) or under section 144(4) referable to subsection (2) other than sub-section (8) on or after 1st day of April, 2021 shall be non est if such assessment is not made in accordance with the procedure laid down under section 144B. There is a telling/pronounced rigour, to follow the procedure under section 144B, lest the assessment would be non est. 68. Going by the provisions under section 144B, when hearing has been envisioned and incorporated, it is imperative to observe principles of natural justice as stipulated. xxx xxx xxx 70. In the circumstances, when an assessee approaches with response to show cause notice, the request made by an assessee, as referred to in clause (vii) of sub section 7 of section 144B, would have to be taken into account and it would not be proper, looking at the prescribed procedure with strong undercurrent to have hearing on a request after notice, to say that petitioner would have opportunity pursuant to section 144C in the present matter, would intercept operation of the scheme contained under section 144B. IT IS SETTLED LAW THAT WHERE EXERCISE OF A POWER RESULTS IN CIVIL CONSEQUENCES TO CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income-tax, Central-I, reported in [2008] 169 Taxman 328 (SC), the Apex Court highlighted the necessity and importance of opportunity of pre-decisional hearing to an assesee and that too in the absence of any express provision. Infact, the requirement of following principles of natural justice was read into Section 142(2A) of the Income Tax Act following the earlier decisions of the Supreme Court in Swadeshi Cotton Mills vs. Union of India (1981) 1 SCC 664 and C.B. Gautam vs. Union of India Ors. (1993) 1 SCC 78. Later on this principle was applied to other quasi-judicial and other tribunals and it is now clearly laid down that even in these actions, where the decision of the authority may result in civil consequences, a hearing before taking a decision is necessary. USE OF THE EXPRESSION MAY IN SECTION 144B (7)(VIII) IS NOT DECISIVE. WHERE A DISCRETION IS CONFERRED UPON A QUASIJUDICIAL AUTHORITY WHOSE DECISION HAS CIVIL CONSEQUENCES, THE WORD MAY WHICH DENOTES DISCRETION SHOULD BE CONSTRUED TO MEAN A COMMAND. CONSEQUENTLY, THIS COURT IS OF THE VIEW THAT REQUIREMENT OF GIVING AN ASSESSEE A REASONABLE OPPORTUNITY OF PERSONAL HEARING IS MANDATORY. 20. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be lawful for them to do such acts, a statute appears to use the language of mere permission, but it has been so often decided as to have become an axiom that in such cases such expressions may have-to say the least-a compulsory force, and so would seem to be modified by judicial exposition. Though the company is not a body or authority, there is no reason why the same principle should not apply. It is thus wrong to suggest that the Explanation is only an enabling provision, when its breach entails in the consequences indicated above. It is not left to one's choice, but the law makes it imperative. Admittedly, M/s Ahmed Oomer Bhoy had not at the material time nominated any person, in relation to their Delhi branch. The matter is, therefore, squarely covered by Section 17(1)(a)(ii). 21. This Court is further of the view that a quasi judicial body must normally grant a personal hearing as no assessee or litigant should get a feeling that he never got an opportunity or was deprived of an opportunity to clarify the doubts of the assessing officer/decision maker. After all confidence and faith of the public in the justness of the decision making process which has seriou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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