2022 (6) TMI 1450 - AT - Income Tax

Bank wins appeal after being denied proper hearing opportunity in faceless appeals process

Bank of India Versus Assistant Commissioner of Income Tax Circle 2 (1) (1), Mumbai And (Vice-Versa)

The ITAT Mumbai held that a bank appellant was denied proper opportunity to present its case before the National Faceless Appeals Centre. Relying on SC ... Faceless appeals procedures - Validity of order passed by the National Faceless Appeals Centre (NFAC) with no oppourtnity provided to present case - whether NFAC has erred in not granting an opportunity to the appellant bank to present the case through the video conferencing as specified under the Faceless Appeals Scheme 2020, provided u/s 250 (6B) of the Income Tax Act? - HELD THAT:- In the Hon'ble Supreme Court's five-judge constitutional bench's landmark judgment, in the case of CIT v. Vatika Townships Pvt Ltd. [2014 (9) TMI 576 - SUPREME COURT] the legal position in this regard has been very succinctly summed up by observing that '(i)f a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect' Hon'ble Supreme Court has observed that 'This (the foregoing analysis) exactly is the justification to treat procedural provisions as retrospective', that, 'In Government of India & Ors. v. Indian Tobacco Association [2005 (8) TMI 113 - SUPREME COURT] the doctrine of fairness was held to be a relevant factor to construe a statute conferring a benefit, in the context of it to be given a retrospective operation' and that 'The same doctrine of fairness, to hold that a statute was retrospective in nature, was applied in the case of Vijay v. State of Maharashtra & Ors. [2006 (7) TMI 648 - SUPREME COURT] - It was held that where a law is enacted for the benefit of the community as a whole, even in the absence of a provision the statute may be held to be retrospective in nature.' Their Lordships also noted that this retrospectively being attached to benefit the persons, is in sharp contrast with the provision imposing some burden or liability where the presumption attaches towards prospectivity. What logically follows from the law so settled by a constitutional bench of the Hon'ble Supreme Court, is that when an opportunity of presenting the case, through the video conferring in the faceless appeal proceedings, is now available to every taxpayer, on-demand, the same must also be held to be admissible in the proceedings, if so demanded by the assessee, in the old rules as well. Thus we deem it fit and proper to remit the matter to the first appellate authority after giving an opportunity for a personal hearing, in terms of rule 12 of the Faceless Appeals Rules 2021, for adjudication de novo in accordance with the law and by way of a speaking order. Ordered, accordingly. Issues involved:Appeal against denial of opportunity for video conferencing in a tax assessment case.Analysis:- The cross-appeals were filed against the order passed by the National Faceless Appeals Centre (NFAC) regarding the assessment year 2010-11 under the Income Tax Act, 1961.- The primary issue raised by the assessee was the denial of the opportunity to present the case through video conferencing, as per the Faceless Appeals Scheme 2020.- The assessee argued that the denial of video conferencing without reason necessitated setting aside the order and remitting the matter for a fresh adjudication.- The Commissioner (DR) contended that video conferencing was not mandatory under the scheme and supported the NFAC's decision.- The Tribunal noted that the Faceless Appeals Scheme 2020 allowed for personal hearings through video conferencing under specific circumstances, subject to approval by the Chief Commissioner or Director-General.- The Tribunal emphasized that the authority concerned had a duty to decide on such requests and that inaction on this matter was not justifiable.- Referring to legal precedents, the Tribunal highlighted the obligation of public authorities to exercise powers granted by law when circumstances warrant.- The Tribunal acknowledged the subsequent Faceless Appeals Scheme 2021, which made personal hearings through video conferencing virtually on-demand, eliminating the discretion in granting such hearings.- Citing legal principles, the Tribunal concluded that the amendment in the scheme to allow video conferencing hearings should be treated as retrospective to address unintended hardships faced by taxpayers.- Consequently, the Tribunal decided to remit the matter to the first appellate authority for a fresh adjudication with an opportunity for a personal hearing through video conferencing as per the Faceless Appeals Rules 2021.- With the matter being remitted for fresh adjudication, all other issues raised in the cross-appeals were deemed academic and did not require immediate adjudication.- Both appeals were allowed for statistical purposes in line with the decision to remit the matter for a new adjudication.The judgment highlights the importance of procedural fairness and the evolving nature of tax policies to address taxpayer grievances effectively, emphasizing the retrospective application of beneficial amendments to ensure equitable treatment in tax assessment proceedings.