Court sets aside assessment order for 2020-21 citing violation of natural justice in faceless assessment.

The court set aside the assessment order for the assessment year 2020-21 due to the violation of natural justice in faceless assessment proceedings. The court emphasized the mandatory nature of providing a personal hearing to the assessee, citing a previous case precedent. The Assessing Officer was directed to conduct a fresh assessment within twelve weeks, granting the petitioner a personal hearing and considering the revised returns/documents. This decision underscores the importance of upholding natural justice and fair procedures in the assessment process under the Income Tax Act, 1961.

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Issues:
Challenge to assessment order under Section 143(3) read with Section 144B of the Income Tax Act, 1961 for the assessment year 2020-21, violation of natural justice in faceless assessment, request for personal hearing, classification of disputed questions of fact and law, mandatory nature of personal hearing.

Analysis:

1. The petitioner filed a writ petition challenging the assessment order passed by Respondent No.1 under Section 143(3) read with Section 144B of the Income Tax Act, 1961 for the assessment year 2020-21. The petitioner contended that the assessment was conducted without a personal hearing, which was a violation of Section 144B(6)(vii) and (viii) of the Act and the principles of natural justice.

2. The petitioner's counsel argued that despite repeated requests for a personal hearing and submission of revised returns/documents, the Respondent No.1 did not grant the opportunity for a personal hearing, which was essential for a fair assessment process.

3. The court noted that the issue of providing a reasonable opportunity for a personal hearing in faceless assessments was settled in a previous case, Bharat Aluminium Company Ltd. vs. Union of India & Ors, where it was held that the discretion to grant a personal hearing should be construed as a command when civil consequences are involved. The court emphasized that an assessee has a vested right to a personal hearing, and this right must be granted upon request.

4. Consequently, the court set aside the assessment order dated 24th September, 2022 and remanded the matter back to the Assessing Officer for a fresh decision within twelve weeks. The Assessing Officer was directed to provide the petitioner with a personal hearing and consider the revised returns/documents before making a new decision in accordance with the law.

5. The court's decision reaffirmed the mandatory nature of providing a personal hearing to an assessee in faceless assessments, emphasizing the importance of natural justice and fair procedure in the assessment process. The judgment serves as a significant precedent for ensuring due process and protecting the rights of taxpayers in the face of evolving assessment procedures under the Income Tax Act, 1961.

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