Facts
The petitioner, a partnership firm in the real estate business, filed its Return of Income for AY 2018-19
Source reference: p. 2The respondent authority issued a show-cause notice under Section 148A(b) alleging escaped assessment under Section 147 of the Income-tax Act, 1961
Source reference: p. 2Despite the petitioner contesting the notice and specifically requesting a personal hearing through video conferencing (VC) via an application dated 07.01.2024
Source reference: p. 3the respondent passed an assessment order on 23.02.2024 under Section 147 r/w Section 144B
Source reference: p. 2The respondent erroneously observed in the final order that the petitioner had not availed the personal hearing
Source reference: p. 3The petitioner challenged the order on the grounds of violation of principles of natural justice
Source reference: p. 3Issues
1. Whether the failure to grant a requested personal hearing through video conferencing under the Faceless Assessment Scheme constitutes a breach of principles of natural justice
Source reference: p. 4 / para. 72. Whether the impugned assessment order and demand notice are sustainable in law given the procedural lapse by the respondent
Source reference: p. 5 / para. 8Law Applied
The court applied Section 144B of the Income-tax Act, 1961, which governs the procedure for Faceless Assessment
Source reference: p. 2It strictly relied on the Standard Operating Procedure (SOP) dated 03.08.2022 issued by the Ministry of Finance, which mandates the provision of a personal hearing through video conferencing when requested by an assessee
Source reference: p. 5The court upheld the settled legal principle that mandatory procedural requirements intended to safeguard natural justice must be strictly followed, and their violation renders the resulting administrative action void
Source reference: p. 5Reasoning
The court found that the petitioner had made a categorical and documented request for a personal hearing via video conferencing on 07.01.2024
Source reference: p. 3However, the respondent authority failed to facilitate this session and instead made a "wrong factual assertion" in the impugned order that no such request was made
Source reference: p. 4The court reasoned that the intent of video conferencing under the Faceless Assessment Scheme is to ensure the assessee has a fair opportunity to explain their case
Source reference: p. 4Since the opportunity for a personal hearing is a mandatory requirement under the SOP dated 03.08.2022, the respondent's failure to grant it constituted a gross violation of the principles of natural justice
Source reference: p. 5Consequently, the lack of adherence to the mandatory SOP invalidated the assessment process
Source reference: p. 5Holding
the mandatory requirement for a video conference for personal hearing cannot be bypassed if requested
The High Court allowed the writ petition and quashed the impugned Assessment Order dated 23.02.2024 and the demand notice dated 07.04.2022
Source reference: p. 5The matter was remanded to the National Faceless Assessment Authority with directions to comply with the SOP and pass a fresh assessment order after according the petitioner a proper hearing in accordance with law
Source reference: p. 6No order as to costs was made
Source reference: p. 6Original Court PDF
B.M. DEVELOPERSvsASSESSMENT UNIT INCOME TAX DEPARTMENT
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