Sanjay Aggarwal Vs National Faceless Assessment Centre (Delhi High Court)
Delhi High Court has set aside an assessment order issued by the National Faceless Assessment Centre, Delhi, for the Assessment Year 2018-2019, citing a failure to grant a personal hearing to the assessee despite multiple requests. The court held that the revenue’s decision to not accord a personal hearing, especially when a variation in income was proposed, amounted to an infraction of the statutory scheme under Section 144B of the Income Tax Act, 1961.
The petitioner, Sanjay Aggarwal, challenged the assessment order dated April 28, 2021, and consequential proceedings. His counsel, Mr. Kapil Goel, argued that despite seeking a personal hearing to explain complex aspects of the case, the respondent/revenue did not provide one, thus violating Section 144B of the Act. Mr. Goel further contended that under Section 144B(9), such assessment proceedings are void in law.
The revenue’s counsel, Mr. Shlok Chandra, argued that the use of the word “may” in clause (vii) of sub-section (7) of Section 144B indicates that granting a personal hearing is not mandatory, and therefore, the petitioner did not have a vested right to one. He also pointed to the correspondence between the petitioner and the revenue, suggesting sufficient opportunities to respond were already provided.
However, the Delhi High Court, after reviewing the record, noted that the petitioner had made several requests for a personal hearing both before and after the issuance of the show-cause notice-cum-draft assessment order dated April 23, 2021. The court observed that these requests were made on April 15 and April 20, 2021, following an earlier show-cause notice on April 13, 2021, and again in the reply filed on April 24, 2021, to the April 23 notice. The petitioner had specifically stated that a personal hearing was necessary due to the complexity of the matter.
The court highlighted clause (vii) of Section 144B (7), which grants the assessee the liberty to request a personal hearing if their income is proposed to be varied in the draft assessment order. The court opined that the use of “may” in this context does not absolve the revenue from considering such a request. Furthermore, sub-clause (h) of Section 144B (7)(xii) read with Section 144B (7)(viii) empowers the revenue to frame standards, procedures, and processes for approving personal hearing requests.
The court noted that in several previous matters, the revenue’s counsel, including Mr. Chandra in this case, had acknowledged that no such specific standards, procedures, or processes for dealing with personal hearing requests had been framed yet.
Based on these observations, the Delhi High Court concluded that it was incumbent upon the respondent/revenue to accord a personal hearing to the petitioner, especially since the revenue had proposed substantial variations to the declared income. The court found that the failure to address the multiple requests for a personal hearing constituted an infraction of the statutory provisions.
Consequently, the Delhi High Court set aside the impugned assessment order dated April 28, 2021. Regarding the revenue’s request to proceed afresh, the court stated that if the law permits such action, it would not make any observations at this stage, leaving the petitioner free to take recourse to legal provisions if and when further steps are taken.
The court also concurred with Mr. Goel’s submission that the faceless assessment scheme under Section 144B was intended to bring transparency and accountability to the tax assessment system, emphasizing that these principles are fundamental regardless of the existence of a specific statutory scheme.
The writ petition and the pending application were disposed of in these terms.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
