Pico Capital Private Limited Vs DCIT (Bombay High Court)
Bombay High Court quashed an income tax assessment order against Pico Capital Private Limited due to a violation of natural justice. The petitioner had explicitly requested a personal hearing during the assessment proceedings, but the request was denied. The assessing officer reasoned that a hearing was unnecessary, as the petitioner had already submitted a written response. However, the court ruled that when the law provides for a personal hearing upon request, it cannot be denied based on an assumption that the petitioner has nothing further to add. The court emphasized that procedural fairness must be upheld, referencing past legal precedents highlighting the importance of hearing a party before making a final decision.
The court also rejected the Income Tax Department’s justification that video conferencing was unavailable due to the transfer of proceedings from the Faceless Assessing Officer (FAO) to the Jurisdictional Assessing Officer (JAO). A government circular had explicitly allowed personal hearings, preferably via video conferencing, or in-person if necessary. Given this, the denial of a hearing lacked valid grounds. As a result, the court set aside the assessment order, demand notice, and penalty notice. The case was remanded for reconsideration, directing the tax authorities to grant a personal hearing and complete proceedings within three months.
