Atulbhai Kantilal Mehta Vs ACIT (Gujarat High Court)
The Gujarat High Court entertained a writ application filed by an assessee challenging an assessment order and consequential proceedings, including a proposed penalty under Section 270A of the Income Tax Act, 1961. The assessee’s case was selected for limited scrutiny under CASS to verify unsecured loans and personal expenditure. Following the issuance of notices and the submission of a draft assessment order proposing additions, the assessee raised objections, arguing that the assessment exceeded the scope of the limited scrutiny and that the provisions of Section 2(22)(e) regarding deemed dividend were not applicable due to their shareholding being below the 10% threshold. Crucially, the assessee specifically requested a personal hearing via video conference, invoking Section 144B(7)(vii) and Section 144B(7)(xii)(h) of the Act. While an opportunity for a video conference was initially provided, the assessee contended that technical issues prevented their participation. Subsequently, after further communication and a renewed request for a video conference, the assessing authority passed the final assessment order without granting the requested hearing.
The assessee argued that the final assessment order was illegal and arbitrary, violating the procedure outlined in Section 144B of the Income Tax Act, particularly the provisions concerning faceless assessment and the right to a personal hearing via video conference. The court noted that Section 144B(7)(vii) explicitly allows an assessee to request a personal hearing when a variation prejudicial to their interest is proposed in the draft assessment order. Furthermore, Section 144B(7)(viii) states that the Chief Commissioner or Director General in charge of the Regional Faceless Assessment Centre may approve such a request if it falls under the circumstances specified in Section 144B(7)(xii)(h). The court referred to a similar case decided by a coordinate bench, Agrawal JMC Joint Venture Vs. ACIT, which emphasized the statutory mandate for providing a personal hearing via video conference under specific circumstances within the faceless assessment scheme. The Gujarat High Court, focusing on whether the assessing authority adhered to the due procedure of law under Section 144B, particularly regarding the personal hearing request, proceeded to examine the relevant provisions of the Act to determine if the assessee’s right to a hearing was properly considered and addressed before the final assessment order was issued.
