Assessment order passed without granting adequate opportunity due to AR’s medical emergency is a violation of natural justice.

Assessment order passed without granting adequate opportunity due to AR’s medical emergency is a violation of natural justice.

Issue:

Whether an assessment order passed by the Assessing Officer (AO) is a violation of the principles of natural justice and liable to be set aside, if it is issued without allowing sufficient time for the assessee to respond or appear for a personal hearing due to the medical emergency of their authorized representative, despite the AO being duly informed of the situation.

Facts:

• For Assessment Year 2024-25, the Assessing Officer (AO) issued various notices, including a notice for personal hearing, as part of the assessment proceedings.
• The authorized representative (AR) of the assessee was admitted to the hospital for gallbladder removal, which prevented the assessee from filing their reply or appearing for the scheduled personal hearing.
• The assessee duly informed the Assessing Officer about the AR’s medical condition.
• Despite being aware of the medical condition and the resulting inability of the assessee to comply, the AO proceeded to pass the impugned assessment order without granting sufficient time or opportunity for the assessee to present their case.

Decision:

The court held that the order passed by the Assessing Officer without considering the medical condition of the assessee’s authorized representative and without providing sufficient time for filing their reply was a clear violation of the principles of natural justice. Therefore, the impugned assessment order was set aside, and the matter was remanded to the Assessing Officer for fresh consideration, with a direction to provide proper opportunity to the assessee.

Key Takeaways:

• Principles of Natural Justice: A fundamental tenet of legal and administrative proceedings is the adherence to principles of natural justice, which include the right to a fair hearing (audi alteram partem) and the right to present one’s case.
• Reasonable Opportunity: The Income-tax Act, particularly sections like 142 (inquiry before assessment) and 144B (faceless assessment, which incorporates natural justice principles), mandates that the assessee be given a reasonable opportunity of being heard. “Reasonable opportunity” implies allowing adequate time and considering genuine difficulties.
• Medical Emergency as Valid Reason: A medical emergency of the authorized representative, when duly communicated to the tax authorities, constitutes a valid and compelling reason for seeking adjournment or additional time.
• Duty of Assessing Officer: The AO has a duty to consider such genuine hardships and not to proceed ex-parte or pass orders without allowing sufficient opportunity, especially when the assessee has proactively informed the department.
• Consequences of Violation: An assessment order passed in violation of natural justice is considered procedurally flawed and is liable to be set aside by higher authorities or courts.
• Remand for Fresh Consideration: The typical remedy for such procedural violations is to set aside the order and remand the matter back to the AO, instructing them to re-do the assessment after providing the assessee with the necessary and fair opportunity to present their case. This ensures that the assessment is completed on merits after due process.