Assessment order for AY 2018-19 set aside; violation of natural justice; remanded for personal hearing

The Court set aside the assessment order, demand notice, and penalty proceeding notice for AY 2018-19 due to a violation of principles of natural justice and mandatory procedures under the Faceless Assessment Scheme and Section 144B. The matter was remanded to the Assessing Officer with directions to grant a personal hearing to the petitioner via Video Conferencing and issue a reasoned order in compliance with the law.

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Issues:
Challenge to Assessment Order under section 143(3) read with section 144B for AY 2018-19, violation of principles of natural justice, interpretation of Section 144B (7) regarding personal hearing.

Analysis:
The petitioner challenged the Assessment Order dated 24th May 2021, demand notice, and penalty proceeding notice issued by Respondent No.1 under section 143(3) and 144B for AY 2018-19, alleging a violation of statutory provisions and principles of natural justice. The petitioner requested a personal hearing under Section 144B(7)(vii)-(ix) of the Income Tax Act, but it was neither granted nor rejected by Respondent No.1. The Respondent disposed of the objections mechanically, denying the request for a personal hearing without providing any reason, leading to a violation of statutory provisions and principles of natural justice.

The Respondent argued that the use of the term 'may' in clause (vii) of sub-Section (7) of Section 144B implies that there is no vested right for the petitioner to claim a personal hearing. However, the Court noted that Section 144B(7) provides for an opportunity of personal hearing if requested by the assessee. The Court referred to a previous judgment where it was held that the revenue must consider requests for personal hearings and frame standards for dealing with such requests.

The Court found that since no hearing was granted before passing the assessment order, there was a violation of principles of natural justice and the mandatory procedure under the Faceless Assessment Scheme and Section 144B of the Act. Consequently, the assessment order, demand notice, penalty proceeding notice, and all related proceedings for AY 2018-19 were set aside. The matter was remanded back to the Assessing Officer with directions to grant a hearing to the petitioner via Video Conferencing and pass a reasoned order in accordance with the law. The Court ordered the uploaded of the order on the website and forwarded a copy to the learned counsel through e-mail.

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