Assessment order quashed due to procedural violations, remanded for fresh decision.

The Court quashed the assessment order under the Income Tax Act, 1961 for the assessment year 2018-19, citing a violation of the faceless scheme and principles of natural justice. The matter was remanded to the respondent for a fresh decision after granting the petitioner a proper opportunity for a hearing. The Court referred to precedent emphasizing the mandatory nature of providing a reasonable opportunity for a personal hearing to the assessee. Consequently, the assessment order, demand notices, and penalty notices were set aside, and the case was disposed of with directions for a new decision.

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Issues:
Challenge to assessment order under Income Tax Act, 1961 for the assessment year 2018-19 based on lack of personal hearing and violation of faceless scheme under Section 144B of the Act.

Analysis:
The petitioner challenged the assessment order dated 22nd April, 2021, under Section 143(3) read with Section 144B of the Income Tax Act, 1961 for the assessment year 2018-19. The petitioner contended that the assessment order was passed without considering the reply furnished on 09th March, 2021, and without providing an opportunity of personal hearing through virtual mode, despite the petitioner's request for the same. The petitioner argued that this action violated the faceless scheme outlined in Section 144B of the Act and the principles of natural justice, making the assessment non-est as per Section 144B(9) of the Act.

The petitioner further pointed out that the respondent, without granting a personal hearing as mandated by Section 144B(7)(vii) of the Act, issued the impugned assessment order making significant additions to the returned income. On the other hand, the respondent's counsel argued that since the petitioner was given an opportunity to submit a reply and documents, a personal hearing was not necessary.

Upon considering the arguments, the Court referred to a previous judgment in the case of Bharat Aluminium Company Ltd. vs. Union of India & Ors., where it was held that the use of the term "may" in Section 144B(7)(viii) should be construed as mandatory when it comes to providing a reasonable opportunity of personal hearing to the assessee. The Court also deemed the classification made by the respondent between matters involving disputed questions of fact and law as legally unsustainable, based on a circular issued on 23rd November, 2020.

Consequently, the Court quashed the impugned assessment order dated 22nd April, 2021, along with the notices for demand and penalty for the assessment year 2018-19. The matter was remanded back to the respondent for a fresh decision after affording the petitioner an opportunity of hearing in compliance with the law. The Court disposed of the writ petition and application with these directions, leaving the rights and contentions of all parties open.

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