Gujarat HC Quashes Faceless Assessment for denying Personal Hearing

Panchvati Ship Breakers Through Its Partner Rameshkumar Shivlal Vs National Faceless Assessment Centre & Anr. (Gujarat High Court)

Gujarat High Court quashed the faceless assessment order in the case of Panchvati Ship Breakers Through Its Partner Rameshkumar Shivlal vs. National Faceless Assessment Centre & Anr. due to the denial of an opportunity for a personal hearing via video conference. The petitioner challenged the assessment order passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961, arguing that the lack of a personal hearing violated the principles of natural justice. Despite requesting a video conference hearing in response to the show cause notice, the petitioner was not granted one before the final order was issued. The court took up the matter on this limited ground and did not delve into the case’s merits.

The respondents acknowledged that they would provide a hearing if the case were remanded. Considering the lack of adherence to the principles of natural justice, the court set aside the impugned assessment order and directed the Assessing Officer to issue a fresh order after granting the petitioner a personal hearing via video conference. The reassessment must be completed within twelve weeks from the receipt of the court’s order. The ruling reinforces the importance of fair procedure in faceless assessments, ensuring that taxpayers have the right to present their case effectively.

FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT

1. Heard learned advocate Mr. Mohit Balani for the petitioners, learned advocate Mr. Dev D. Patel for learned Senior Standing Counsel Mr. Varun K. Patel for the respondent.

2. Rule returnable forthwith. Learned advocate waives service of notice of rule on behalf of the respondents.

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

4. By this petition under Article 227 of the Constitution of India, the petitioner has challenged the assessment order passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961 (for short ‘the Act’) along with the demand notices issued under Section 156 of the Act on the ground that the petitioner was not provided any opportunity of hearing through video conference. The details of the matter are narrated in the following table :-

5. This Court has entertained this petition on the limited ground of breach of principles of natural justice. We therefore, do not refer to the facts in detail. The details of issuance of show cause notice as contemplated in Section 144B of the Act is narrated in the above table. The petitioner has also requested for hearing through video conference as stated in column No.6 of the aforesaid table, explaining details about the addition proposed in the show cause notice.

6. It appears that without considering the request of the petitioner for hearing through video conference the respondent No.2 passed the assessment order under Section 143(3) as stated in column No.7 in the aforesaid table in each of the petition.

7. Learned advocate Mr. Mohit Balani for the petitioner submitted that inspite of the fact that the petitioner has requested for hearing through video conference but no such hearing was provided and straightway the impugned assessment order was passed reiterating the proposed addition suggested in the show cause notice. It was therefore submitted that in order to comply with the principles of natural justice, the impugned order may be quashed and set aside and the matter may be remanded back to the Assessing Officer to pass a fresh denovo order after giving an opportunity of hearing to the petitioner through video conference.

8. On the other hand, learned advocate Mr. Dev D. Patel for learned Senior Standing Counsel Mr. Varun K. Patel for the respondents submitted that the petitioner would be provided the opportunity of hearing through video conference if the matter is remanded back to the Assessing Officer.

9. Considering the above submissions and the facts on record, it is not in dispute that there is no adherence to the principles of natural justice as there is no opportunity of personal hearing through video conference is provided to the petitioner before passing the impugned assessment order.

10. In view of the above, without entering into the merits of the matter, we quash and set aside the impugned assessment order passed under Section 143(3) read with Section 144B of the Income Tax Act, and the matter is remanded back to the Assessing Officer to pass a fresh de novo order after providing fresh opportunity of hearing through video conference to the petitioner in accordance with law. Such exercise shall be completed within a period of Twelve weeks from the date of receipt of copy of this order. Rule is made absolute to the aforesaid extent. No order as to costs.