Denial of Requested Video Conference Hearing Vitiates Assessment Order.

Issue

Is an assessment order legally sustainable if the Assessing Officer passes it without granting a personal hearing through video conferencing, despite a specific written request for the same by the assessee?

Facts

The assessee-company’s income tax return for the Assessment Year 2022-23 was selected for scrutiny.
A show-cause notice was issued proposing additions under Section 68 for unexplained long-term borrowings and other loans.
The assessee filed a detailed written reply to the notice.
Crucially, within this reply, the assessee specifically requested a personal hearing through video conferencing to explain its case.
The Assessing Officer (AO) ignored this request and proceeded to pass a final assessment order, raising a substantial tax demand.

Decision

The High Court quashed and set aside the impugned assessment order.
It held that the order was passed in clear violation and breach of the principles of natural justice (audi alteram partem – the right to be heard).
The failure to grant a specifically requested hearing was deemed a fatal procedural flaw.
The matter was remanded back to the Assessing Officer for a fresh (de novo) decision. The AO was directed to first consider the assessee’s written reply and then provide a proper opportunity for a personal hearing before passing any new order.

Key Takeaways

Right to Hearing is Mandatory Upon Request: Under the faceless assessment regime, if a taxpayer makes a specific request for a personal hearing via video conferencing, it is mandatory for the tax authority to grant it. This is not a discretionary power of the AO.
Violation of Natural Justice is a Jurisdictional Error: Denying a requested hearing is a fundamental procedural error that vitiates the entire assessment order, making it legally unsustainable.
Written Reply is Not a Substitute for Oral Hearing: The opportunity to file a written submission and the opportunity for an oral hearing are two distinct and independent rights. Fulfilling one does not absolve the authority of its duty to provide the other when requested.
Procedural Fairness is Key: The judgment underscores the importance of adhering to the prescribed procedures designed to ensure fairness in the assessment process. A shortcut that bypasses these safeguards will not be upheld by the courts.

HIGH COURT OF GUJARAT

Arris Estates (P.) Ltd.

Assessment Unit

BHARGAV D. KARIA and Pranav Trivedi, JJ.

R/SPECIAL CIVIL APPL. NO. 6159 of 2024

OCTOBER 7, 2025

Tushar Hemani, Senior Counsel and Ms Vaibhavi K Parikh for the Petitioner. Varun K. Patel, Senior Standing Counsel for the Respondent.

JUDGMENT

Pranav Trivedi, J.- Heard learned Senior Advocate Mr.Tushar Hemani with learned advocate Ms.Vaibhavi K.Parikh, for the petitioner and Mr.Varun Patel learned Senior Standing Counsel for the respondent.

2 Rule returnable forthwith. Learned Senior Standing Counsel Mr.Varun Patel, waives service of notice of rule for and on behalf of the respondent.

3 Having regard to the controversy involved in this petition, with the consent of the learned advocates for the respective parties, the matter is taken up for final hearing.

4 By way of present petition under Article 226 of the Constitution of India, the petitioner challenges the validity of the Assessment Order dated 15.03.2024 passed under Sec.143(3) r/w. Sec.144B of the Income Tax Act, 1961 (for short ‘the Act’) for the Assessment Year 2022-23 and also the Demand Notice dated 15.03.2024 under Sec.156 of the Act raising a total demand of Rs.15,92,65,390/-.

5 Brief facts giving rise to filing of the present are as under:

5.1 The petitioner is a Company incorporated under the provisions of the Companies Act, 1956, inter alia engaged in the business of renting immovable properties. The petitioner filed its Return of Income for the Assessment Year 2022-23. The Return of Income was selected for scrutiny assessment and statutory notice under Sec.143(3) of the Act was issued on 02.06.2023.

5.2 It is the case of the petitioner that various details were called for by the respondent vide notices dated 07.08.2023, 18.12.2023 and 15.01.2024. All the details and information were duly furnished by the petitioner from time to time vide communication dated 25.09.2023, 25.12.2023 and 22.01.2024.

5.3 Thereafter, the respondent issued a show-cause notice on 10.02.2024 whereby, two additions were proposed viz one addition of Rs.16,46,55,112/- under Sec.68 of the Act in respect of long term borrowings and two addition of Rs.15,87,46,545/- in respect of fresh loans and advances to others.

5.4 Subsequent to the notice dated 10.02.2024, a request for adjournment was made by the petitioner. Thereafter, another show-cause notice was issued by the respondent on 22.02.2024 and the petitioner was granted time till 27.02.2024 to furnish its reply.

5.5 The petitioner again requested for short adjournment. Therefore, another notice was issued on 29.02.2024, wherein, time was extended till 04.03.2024 for the petitioner to furnish the details as envisaged.

5.6 The petitioner communicated its reply vide communication dated 04.03.2024 raising various legal contentions and also requested to provide an opportunity of being heard vide video conferencing.

5.7 It is the case of the petitioner that despite the request being made for hearing through vide conference, the respondent straightaway framed the assessment under Sec.143(3) r/w. Sec.144B of the Act on 15.03.2024 determining the total income at Rs.16,78,26,682/- and consequently raising the demand of Rs.15,92,65,390/-. It is being aggrieved by this impugned order dated 15.03.2024 passed without giving the opportunity of hearing through video conferencing that the present writ petition is preferred.

6 It was submitted by learned Senior Advocate Mr.Tushar Hemani appearing with learned advocate Ms.Vaibhavi Parikh for the petitioner that the impugned order is passed in gross violation of the principles of natural justice since the request for opportunity of being heard through video conferencing has not been acceded to.

6.1 It was submitted by learned Senior Advocate Mr.Tushar Hemani that the very idea behind conducting video conference is to ensure that an assessee gets an opportunity to explain the case to the authority concerned in an effective manner. In the present case, the petitioner was not at all afforded an opportunity to represent its case through video conference. It was further submitted that the limitation of framing assessment was getting expired on 31.03.2024. Therefore, the respondent had sufficient time for framing the assessment and granting an opportunity of hearing through video conference. Therefore, there was gross violation of principles of natural justice.

7 Per Contra, learned Senior Standing Counsel Mr.Varun Patel for the respondent, conceded to the fact that the opportunity of hearing through video conferencing to the petitioner has not been granted. However, it was submitted that the assessee had sought adjournments time and again. First notice was issued on 02.06.2023, and thereafter the petitioner has requested for regular adjournments. Therefore, this being a time barring matter, the department was left with no option but to pass the Assessment Order.

8 In view of such factual aspect, it was submitted by learned Senior Standing Counsel Mr.Varun Patel that the impugned order does not suffer from procedural infirmities since all procedure as specified in the Income Tax Act, and Standard Operating Procedure issued by the National E-Assessment Centre have been followed in its true spirit.

8.1 In wake of such submissions, learned Senior Standing Counsel Mr.Varun Patel has requested to dismiss the present writ petition.

9 Having heard the learned advocates appearing for the respective parties and having perused the material on record, it cannot be disputed that the impugned order is passed in clear violation and breach of principles of natural justice and the fact that the petitioner was not granted an opportunity of hearing through video conferencing is undisputed.

10 Therefore, without entering into merits of the matter, the impugned order dated 15.03.2024 for the Assessment Year 2022-23 passed under Sec.143(3) r/w. Sec.144B of the Act is hereby quashed and set aside and the matter is remanded to the respondent -Assessing Officer to pass a fresh de novo order, in accordance with law after considering the reply of the petitioner as well as after providing an opportunity of hearing to the petitioner. Such exercise shall be completed within 12 weeks from the date of receipt of copy of this order.

The petition is disposed of accordingly. Rule is made absolute to the aforesaid extent. No order as to costs.