An assessee has a vested right to personal hearing and the same has to be given if an assessee asks for it. The right to personal hearing cannot depend upon the facts of each case. These were stated by High Court of Delhi, consisting Justice Manmohan in the case of Bharat Aluminium Company Ltd. vs. Union of India & Ors. [W.P.(C) 14528/2021] on 14.01.2022.
The facts of the case are that the impugned orders was passed arbitrarily without following the principles of natural justice and in violation of the scheme of faceless assessment under Section 144B of the Act, inasmuch as even after the ‘Nil’ or ‘Null’ variation proposed in the show cause notice, additions had been made to the assessed income in the draft assessment order as well as in the impugned final assessment order. Present writ petition has been filed by the petitioner challenging the action of respondent in passing the impugned final assessment order under Section 143(3) of the Income Tax Act, 1961 (Act) and the impugned notice under Section 156 of the Act for Assessment Year 2018-19.
The Counsel for the petitioner contended that respondent in the draft assessment order as well as in the impugned final assessment order had proceeded to make additions to the assessed income on the false premise that the petitioner had not furnished relevant details/information in response to the statutory notice issued under Section 142(1) of the Act. He stated that respondent had failed to appreciate that the petitioner was unable to upload the file due to technical glitches on the respondent’s own portal. He emphasised that the petitioner had still filed reply to the notice that too within the due date vide email. He submitted that while Section 144B(1)(xvi) provides an opportunity to the assessee by serving a Show Cause Notice in case any variation of assessment is proposed which is prejudicial to the interest of assessee, Section 144B(1)(xxv) provides for issuance of draft assessment order to the assessee after considering the reply to Show Cause Notice. He emphasized that respondent issued a Show Cause Notice under Section 144B(1)(xvi) proposing ‘Null’ or ‘Nil’ variation and the petitioner duly confirmed the same and, thus, there was no non-compliance on the part of the petitioner. He also stated that the petitioner had not been granted any opportunity of personal hearing, despite a specific request was made u/s 144B(7) of the Act.
The Counsel for the respondents submitted that cases of violation of principle of natural justice can be summarized in two categories i.e. (i) denial of opportunity and (ii) insufficiency of opportunity. He stated that the cases falling under the first category, wherein no opportunity was provided to the person charged, cannot withstand the scrutiny of law and were required to be set aside. However, in cases where insufficiency of opportunity was complained of, the prejudice caused to the person deprived of sufficient opportunity had to be taken into account before any finding on legality of such proceedings was recorded. He further stated that personal hearing in assessment proceedings under the Act is an added opportunity in addition to the written replies submitted by assessee and hence denial thereof would fall under the second category of “insufficiency of opportunity. He submitted that grant of personal hearing in routine and mechanical manner or stereotyped manner would not only frustrate the entire concept of Faceless Assessment Scheme but would also defeat the very purpose for which this Scheme was brought about by the Legislature.
The High Court of Delhi held that an assessee has a vested right to personal hearing and the same has to be given, if an assessee asks for it. The right to personal hearing cannot depend upon the facts of each case. For the aforesaid reason, the impugned final assessment order and impugned notice issued by respondent to the petitioner were set aside and the matter was remanded back to the Assessing Officer who would issue a Show Cause Notice and a draft assessment order and thereafter pass a reasoned order in accordance with law as the classification between fact and law is not founded on intelligible differentia and the said differentia has no rational relation to the object sought to be achieved by Section 144B of the Act. With the aforesaid direction, the present writ petition along with pending application stood disposed of.
Judgment reviewed by Shristi Suman. Read Judgment