Assessee Can Request Personal Hearing If Final Order Is Passed With Variations Not Present In Draft Order- Gujarat HC
A Gujarat High Court Bench of Justice NV Anjaria and Justice Bhargav D Karia has quashed an assessment order and a demand notice of Rs. 1,01,48,95,580/-, while observing that "the impugned order was passed by the respondent in violation of principles of natural justice without affording an opportunity of personal hearing by not following the prescribed procedure laid down as per the provisions of section 144B of the Act, 1961 for Faceless assessment."
The Court also stressed that as per the provisions of Section 144B(7) of the Income Tax Act, 1961, in case of variation prejudicial to the assessee as proposed in the draft assessment order, the assessee is entitled to request for a personal hearing.
Senior Advocate MR Bhatt appeared for the Respondent side, while Counsel Hardik Vora appeared for the Petitioner.
In this case, the Petitioner was engaged in the business of refining and trading of different kids of edible oils, and had filed a return of income declaring the total income at Rs. 1,97,88,000/-. He was taken under scrutiny and assessment under the E-assessment Scheme, 2019, and subsequently, a notice under Section 143(2) of the Act was issued. Further notices under Section 142(1) of the Act were issued along with detailed questionnaires, which the Petitioner submitted his reply from time to time.
The Petitioner approached the High Court under Article 226 of the Indian Constitution, and prayed to set aside an assessment order passed under Section 143(3) read with Section 144B of the Act. He further prayed to stay the assessment order/or demand of Rs. 1,01,48,95,580/- and consequent penalty proceedings.
The Petitioner contended before the Court that the Respondent authority passed the final assessment order making a huge addition of Rs. 92,42,86,979/- without providing opportunity of hearing to the Petitioner on the basis of new material which was never mentioned in the draft assessment order or any of the earlier notices.
On a detailed perusal of the applicable provisions, the Court observed that "As per the provisions of section 144B(7) in case of variation prejudicial to the assessee as proposed in the draft assessment order, the assessee is entitled to request for personal hearing and upon such request, the personal hearing may be provided by the authority, if the case of the assessee is covered by circumstances provided therein in exercise of powers under sub-clause (h) of clause (xii) of section 144B(7) of the Act, 1961."
In furtherance of the same, the Court held that the impugned order was in violation of the principles of natural justice, and resultantly, the petition was allowed. The Court quashed the order of assessment and demand notice.
The Court also ordered that the Respondent will remain at liberty to proceed with assessment under Section 144B of the Act as permissible under the law after issuance of show cause notice-cum-draft assessment order so as to provide an opportunity of hearing to the Petitioner. It was ordered that the exercise must be completed within 12 weeks from the date of receipt of the order.
Cause Title: Map Refoils India Limited vs National E-Assessment Centre, Delhi