Income Tax: Faceless Assessment Scheme grants mandatory right to personal hearing, rules Delhi High Court
The Delhi High Court in the case of Bharat Aluminium Company Ltd. v/s Union of India & Ors. ruled that Faceless Assessment Scheme grants mandatory right to personal hearing.
The writ petition has been filed by the petitioner challenging the action of respondent in passing the impugned final assessment under Section 143(3) of the Income Tax Act, 1961 and the impugned notice under Section 156 of the Act for Assessment Year 2018-19.
Mr. Arvind Datar, counsel appearing for the petitioner, assailed the impugned orders that they are passed arbitrarily and without following the principles of natural justice and in gross violation of the scheme of faceless assessment under Section 144B of the Act, inasmuch as even after the ‘Nil’ or ‘Null’ variation proposed in the show cause notice, additions had been made to the assessed income in the draft assessment order as well as in the impugned final assessment order.
The respondents contended that the cases of violation of principle of natural justice can be summarized in two categories: denial of opportunity and insufficiency of opportunity. He contended that the cases falling under the first category, wherein no opportunity was provided to the person charged, cannot withstand the scrutiny of law and were required to be set aside. However, in cases where insufficiency of opportunity was complained of, the prejudice caused to the person deprived of sufficient opportunity had to be taken into account before any finding on legality of such proceedings was recorded.
The division bench of Justice Manmohan and Justice Navin Chawla noted that no Show Cause Notice, as mandatorily required by Section 144B(1)(xvi) of the Act, had been served upon the petitioner with respect to the variations made. The draft Assessment Order had also been issued without considering the reply which was submitted by the petitioner well in time in response to notice issued under Section 142(1) of the Act through email, given the technical glitch in the online facility.
The court said that “faceless assessment scheme does not mean no personal hearing. Not understood as to how grant of personal hearing would either frustrate the concept or defeat the very purpose of faceless assessment scheme.”
The court added 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.
The court set aside the impugned final assessment order and impugned notice issued by respondent to the petitioner and remanded back the matter to the Assessing Officer who shall issue a Show Cause Notice and a draft assessment order and thereafter pass a reasoned order in accordance with law.
