Assessment order quashed for denying effective personal hearing despite technical issues under Section 147 and 144B

Gujarat HC quashed faceless assessment order passed under Section 147 r.w.s. 144B and demand notice under Section 156. Court held that respondent violated principles of natural justice by failing to provide effective personal hearing opportunity. Despite petitioner joining video conference, technical audio issues forced communication through chat box, and requests for rescheduling were denied. No draft assessment with show cause notice was provided as required under Section 144B(1) and 144B(7). Court emphasized that natural justice principles must be adhered to in every case, and authorities cannot bypass hearing requirements assuming futility.

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Issues Involved:
1. Violation of principles of natural justice.
2. Technical glitches during the video conference hearing.
3. Compliance with Section 144B of the Income Tax Act, 1961.

Summary:

Issue 1: Violation of Principles of Natural Justice
The petitioner argued that the impugned assessment order dated 30.09.2021 and the demand notice for the assessment year 2018-19 were passed in gross violation of the "principles of natural justice." The petitioner emphasized that issuing a show cause notice and providing a personal hearing is essential before passing any adverse order. The court reiterated that principles of natural justice must be adhered to in every case and cannot be bypassed on the presumption that no prejudice will be caused.

Issue 2: Technical Glitches During Video Conference Hearing
The petitioner requested a personal hearing through video conference, which was scheduled but could not be effectively conducted due to technical glitches. The petitioner communicated with the authority through a chat box, highlighting that the conversation was limited to procedural aspects and not the merits of the case. The court noted that the petitioner did not get an effective opportunity to explain the case orally due to these technical issues, and the request for rescheduling the video conference was turned down.

Issue 3: Compliance with Section 144B of the Income Tax Act, 1961
The court referred to Section 144B, which mandates a faceless assessment procedure, including the provision of a draft assessment order and an opportunity for a personal hearing through video conferencing. The court observed that the impugned order was passed without following the prescribed procedure under Section 144B, thereby violating the principles of natural justice.

Conclusion:
The court quashed and set aside the impugned assessment order and demand notice dated 30.09.2021. The respondent/Revenue was granted the liberty to proceed with the assessment under Section 144B after issuing a show cause notice-cum-draft assessment order and providing an opportunity of hearing to the petitioner. This exercise must be completed within 12 weeks from the date of receipt of the court's order. The court clarified that it did not examine the merits of the case.

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