AO can not pass ex parte order five days after last hearing was fixed without notice to assessee even if assessee failed to seek adjournment on the date of last hearing
In a recent judgment, the Hon’ble Allahabad High Court has held that AO can not pass ex parte order five days after last hearing was fixed without notice to assessee even if assessee failed to seek adjournment on the date of last hearing
ABCAUS Case Law Citation:
ABCAUS 4046 (2024) (05) HC
In the instant case, the assessee had filed a writ petition against the ex parte assessment order passed under Section 143(3) read with Section 144-B of the Income Tax Act, 1961 (the Act).
The Hon’ble High Court observed that the instant case was assigned to the National Faceless Assessment Centre (NFAC). The NFAC generated notice under Section 143(2) of the Act. A notice under Section 142(1) of the Act was generated fixing the date for hearing. On that date, the assessee prayed for adjournment. Thereafter, next date was fixed on which the assessee furnished response thereto. Further, response was furnished on two occasions.
It was further observed that after the final adjournment no further date for hearing was fixed. However, replies were entertained. Thereafter another email of show-cause notice was issued to the assessee fixing last hearing giving only two days time to respond.
The Hon’ble High Court again noted that as per order sheet no proceeding whatsoever took place on the date fixed. Secondly, no order came to be passed on that date, nor any further date was fixed in the proceedings. Thereafter, the proceeding continued wholly ex parte to the extent a draft order was prepared and finalised. Even in those proceedings no opportunity of hearing was given to the assessee to furnish any response.
The Hon’ble High Court opined that there was gross violation of essential principles of natural justice committed by the assessing authority. No real opportunity of hearing was granted to the assessee for the date of last hearing. In any case, even if the assessee had failed to avail that opportunity and failed to apply for adjournment on that date, it never became to the assessing authority to then pass no order on that date and to proceed against the assessee wholly ex parte, thereafter.
The Hon’ble High Court was displeased by the fact that the assessment order had been passed five days after the last date fixed that too without conducting any proceeding involving the assessee. Neither on the date fixed for last hearing nor on subsequent dates there was record of any proceeding or any other date fixed.
Accordingly, the Hon’ble High Court set aside the assessment order. It was directed that petitioner may treat that order as final show-cause notice and submit its reply thereto within a period of one week. If the Assessing Officer is inclined to accept the explanation furnished by the assessee, in entirety, he may pass the consequential order without fixing any further date for hearing as the petitioner has not “requested” for the same. If however, he proposes to reject the explanation furnished by the petitioner, he would necessarily fix a date for hearing with at least 15 days prior notice. It may be communicated through prescribed mode.
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