Relief Against Assessment Order Passed Without Granting Requested Personal Hearing via Video Conferencing

The petitioner, an individual assessee, filed an income tax return for Assessment Year 2024-25 reporting a business loss. The case was selected for scrutiny assessment under the Faceless Assessment Scheme. In response to a show-cause notice dated 14.03.2026, the petitioner requested a personal hearing via video conference (VC).

Although the respondent scheduled the VC for 23.03.2026, they failed to provide the necessary password/link, preventing the petitioner from attending. Despite the petitioner notifying the department of this technical failure, the respondent proceeded to pass a final Assessment Order on 27.03.2026, creating a tax demand of Rs. 16,63,84,460/- and initiating penalty proceedings.

Whether the failure to provide a password/link for a scheduled video conference hearing constitutes a violation of the principles of natural justice and the mandatory provisions of the Income Tax Act.

Whether the Assessment Order passed without affording a personal hearing as requested by the assessee is liable to be set aside.

The Court applied the statutory mandate of Section 144B of the Income Tax Act, 1961, specifically Section 144B(6)(vii) and Section 144B(6)(viii), which grant the assessee a right to request a personal hearing through video conferencing in cases where a variation is proposed in the income or loss.

The Court also relied on the fundamental Principle of Natural Justice (Audi Alteram Partem), which requires an adequate and meaningful opportunity to be heard before an adverse order is passed.

The Court observed that the facts were largely undisputed: the petitioner had made a timely request for a VC hearing, and the respondent had even scheduled it. However, the respondent effectively denied this opportunity by failing to provide the technical means (the password) to join the session.

The Court noted that the respondent’s counsel could not justify or counter the fact that the hearing never took place due to this technical omission. Since the assessment resulted in a significant financial demand and variations from the returned income, the statutory requirement under Section 144B was triggered, making the personal hearing mandatory rather than discretionary. Consequently, passing the order without rectifying the technical failure and conducting the hearing rendered the process de hors the law.

The Court quashed and set aside the Assessment Order and the consequential penalty notices. The matter was remanded to the respondent authorities with a direction to pass a fresh order after providing the petitioner an opportunity to file a reply and conducting a mandatory personal hearing via video conferencing. The exercise is to be completed within 12 weeks.