Faceless Assessment Order Quashed for Denying Opportunity of Personal Hearing
Summary in Key Points:
- Issue: Whether a faceless assessment order passed under Section 144B of the Income-tax Act, 1961 is valid when the assessee is denied an opportunity for a personal hearing through video conference.
- Facts: The Assessing Officer (AO) issued a show cause notice under Section 144B proposing additions to the assessee’s income. The assessee requested a hearing through video conference to explain their case but the AO passed the assessment order without granting the request.
- Decision: The ITAT held that the assessment order was invalid as it violated the principles of natural justice by denying the assessee an opportunity to be heard.
Analysis:
The ITAT ruled in favor of the assessee, quashing the assessment order and remanding the matter back to the AO. The ITAT emphasized the following:
- Violation of Natural Justice: Denying the assessee’s request for a video conference hearing breached the principles of natural justice, as they were not given a fair opportunity to present their case before the assessment order was passed.
- Faceless Assessment Scheme: While the faceless assessment scheme aims to streamline the assessment process, it should not compromise the fundamental right of the assessee to be heard.
- Remand for Fresh Order: The ITAT directed the AO to pass a fresh order after providing the assessee with an opportunity for a hearing through video conference.
Important Note: This case highlights the importance of upholding the principles of natural justice even in the context of faceless assessment proceedings. While technology can enhance efficiency, it should not be used to deny taxpayers their fundamental right to be heard. This decision ensures that assessees are given a fair chance to present their case and challenge any proposed additions before an assessment order is finalized.
HIGH COURT OF GUJARAT
Panchvati Ship Breakers
v.
National Faceless Assessment Centre
BHARGAV D. KARIA and D.N. Ray, JJ.
R/SPECIAL CIVIL APPLICATION NO. 7860 of 2022
DECEMBER 10, 2024
Mohit R. Balani, Adv., for the Petitioner. Varun K. Patel, Adv., for the Respondent.
ORDER
Bhargav D. Karia, J.- Heard learned advocate Mr. Mohit Balani for the petitioners, learned advocate Mr. Dev D. Patel for learned Senior Standing Counsel Mr. Varun K. Patel for the respondent.
2. Rule returnable forthwith. Learned advocate waives service of notice of rule on behalf of the respondents.
3. Having regard to the controversy involved in this petition which is in narrow compass, with the consent of the learned advocates for the respective parties, this petition is taken up for final hearing.
4. By this petition under Article 227 of the Constitution of India, the petitioner has challenged the assessment order passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961 (for short ‘the Act’) along with the demand notices issued under Section 156 of the Act on the ground that the petitioner was not provided any opportunity of hearing through video conference. The details of the matter are narrated in the following table :-
| Matter No. | Assessment Year | Date of order passed u/s 143(3) | Date of response | Date of draft Assessment Order | Date of request for hearing through video conference | Date of final assessment order |
| SCA 7860/2022 | 2013-14 | 31.03.2016 | – | 26.03.2022 | 28.03.2022 | 29.03.2022 |
5. This Court has entertained this petition on the limited ground of breach of principles of natural justice. We therefore, do not refer to the facts in detail. The details of issuance of show cause notice as contemplated in Section 144B of the Act is narrated in the above table. The petitioner has also requested for hearing through video conference as stated in column No.6 of the aforesaid table, explaining details about the addition proposed in the show cause notice.
6. It appears that without considering the request of the petitioner for hearing through video conference the respondent No.2 passed the assessment order under Section 143(3) as stated in column No.7 in the aforesaid table in each of the petition.
7. Learned advocate Mr. Mohit Balani for the petitioner submitted that inspite of the fact that the petitioner has requested for hearing through video conference but no such hearing was provided and straightway the impugned assessment order was passed reiterating the proposed addition suggested in the show cause notice. It was therefore submitted that in order to comply with the principles of natural justice, the impugned order may be quashed and set aside and the matter may be remanded back to the Assessing Officer to pass a fresh denovo order after giving an opportunity of hearing to the petitioner through video conference.
8. On the other hand, learned advocate Mr. Dev D. Patel for learned Senior Standing Counsel Mr. Varun K. Patel for the respondents submitted that the petitioner would be provided the opportunity of hearing through video conference if the matter is remanded back to the Assessing Officer.
9. Considering the above submissions and the facts on record, it is not in dispute that there is no adherence to the principles of natural justice as there is no opportunity of personal hearing through video conference is provided to the petitioner before passing the impugned assessment order.
10. In view of the above, without entering into the merits of the matter, we quash and set aside the impugned assessment order passed under Section 143(3) read with Section 144B of the Income Tax Act, and the matter is remanded back to the Assessing Officer to pass a fresh de novo order after providing fresh opportunity of hearing through video conference to the petitioner in accordance with law. Such exercise shall be completed within a period of Twelve weeks from the date of receipt of copy of this order. Rule is made absolute to the aforesaid extent. No order as to costs.