Opportunity of personal hearing u/s 144B(6)(viii) must even if assessee had not requested

Section 144B(6)(viii) cannot be read to mean that opportunity of personal hearing may be granted only where the assessee specifically requests for the same

In a recent judgment, the Hon’ble Allahabad High Court has again reiterated that provisions of section 144B(6)(viii) cannot be read to mean that opportunity of personal hearing may be granted only where the assessee specifically requests for the same 

ABCAUS Case Law Citation:
ABCAUS 4013 (2024) (05) HC

Important Case Laws relied upon:
Satish Kumar Bansal Huf Vs. National Faceless Assessment Centre NAFAC and Another

Opportunity personal hearing 144B

The Petitioner assessee had filed a Writ Petition before the Hon’ble Allahabad High Court challenging the ex parte assessment order passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961 (the Act) for Assessment Year  2022-23.

In the instant case, while proceedings had been initiated in 2023, no date was fixed in that. The first notice in that regard was uploaded on the web portal of the income tax on fixing date in March 2024. However, no intimation was given to the petitioner about such notice inasmuch as neither that fact was communicated to the petitioner on his registered e-mail ID or through SMS mode.

The Hon’ble High Court from the order sheet observed that the case was assigned to the National Faceless Assessment Centre (‘NFAC’) on 16.05.2023. On 02.06.2023 it issued intimation letter to the assessee. Also, on that date, NFAC generated notice under Section 143(2) of the Act. Then, on 24.08.2023 it prepared a proposal for generation of notice under Section 142(1) of the Act. Accordingly, a draft notice was prepared. It was followed by a proposal to generate notice under Section 142(1) of the Act. The same was approved with some additional remarks added and on that date itself i.e. 24.08.2022 the final notice under Section 142(1) of the Act was generated, for the date 08.09.2023. On that date, the assessee prayed for adjournment. Thereafter, next date was fixed for 26.10.2023. Another notice under Section 142(1) of the Act was approved and notice generated with additional remark on 19.10.2023 itself. On 26.10.2023 the assessee furnished response thereto. Further, response was furnished on 24.11.2023 and 28.11.2023.

Thus, after the adjournment for the date 08.09.2023, no further date for hearing was fixed. However, replies were entertained. Thereafter, on 19.03.2024 another show-cause notice was issued to the assessee. On that, hearing was fixed for 22.03.2024 by 03:43 p.m.

The Hon’ble High Court opined that even if it is assumed, the e-mail communication 19.03.2024 was issued to and served on the petitioner, only two days time was granted to the assessee to respond. The inadequacy of the time granted may also not hold us back any longer. The order sheet clearly brings out and no proceeding whatsoever took place on the date fixed 22.03.2024 and no order was 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 on the own showing of the revenue authorities, wholly ex parte assessment order came to be passed for no fault of the assessee. In the first place, wholly inadequate two day time was granted to the assessee to furnish reply to the notice dated 19.03.2024 and second without conducting any proceeding on the date fixed, ex parte assessment order had been passed. 

The Hon’ble High Court observed that in a recent case, the Court had the occasion to deal with issue of denial of adequate opportunity of hearing. It was held that the provisions of section 144B(6)(viii) does not suggest that grant of opportunity of personal hearing is optional at the discretion of the Assessing Officer. On the contrary in the context of rights in dispute before the Assessing Officer and under the Scheme of the Act, providing for opportunity of personal hearing appears to be the Rule and its waiver an exception to be exercised by the assessee. Wherever the assessee makes a specific request in terms of Section 144B(vii), that would be enforced on the Assessing Authority through National Faceless Assessment Centre in accordance with Section 144B(6)(viii). However, the provision cannot be read to mean that opportunity of personal hearing may be granted only where the assessee specifically requests for the same.

In the instant case the Hon’ble High Court opined that gross violation of essential principles of natural justice had been committed by the assessing authority. No real opportunity of hearing was granted to the assessee for the date 22.03.2024. 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 the date 22.03.2024 and to proceed against the assessee wholly ex parte, thereafter. 

The Hon’ble High Court further observed that the assessment order dated 28.03.2024 had been passed five days after the last date fixed that too without conducting any proceeding involving the assessee. Neither on 22.03.2024 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 the petitioner may treat that order as final show-cause notice and submit its reply thereto within a period of one week and not later. 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. The petitioner undertakes to appear before the Assessing Authority in the manner prescribed on that date. Thereafter, assessment proceeding may be carried on and be completed in accordance with law.

The Hon’ble High Court also directed that order of the Curt be also communicated to the Principal Commissioner of Income Tax for taking appropriate corrective action with respect to the conduct offered by the Assessing Officer.

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