Opportunity of hearing: failure to grant requested video-conference vitiated faceless reassessment, requiring fresh proceedings.

Reassessment proceedings under the Income-tax Act were set aside where the taxpayer's request for a video conferencing hearing under the faceless assessment procedure was not honoured, producing a denial of opportunity to be heard contrary to principles of natural justice; the court applied faceless-assessment procedural standards and quashed the reassessment and consequent demand as procedurally vitiated. The Revenue is directed to proceed anew from the stage of granting a video conferencing hearing and to afford the hearing within twelve weeks of receipt of the order.

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Issues: Whether the reassessment order dated 29.03.2022 under Section 147 read with Section 144B of the Income-tax Act, 1961 for A.Y. 2017-2018 is vitiated by denial of an opportunity of hearing through video conferencing and thereby violates principles of natural justice.

Analysis: The petitioner did not file a return for A.Y.2017-18 and received notice initiating reassessment proceedings. A show cause cum draft assessment order granted time to submit explanation up to 23:59 hours of 28.03.2022; the petitioner uploaded a request for video conferencing on 28.03.2022. The reassessment order dated 29.03.2022 was passed without providing the requested video conferencing hearing. The procedure set out in Section 144B of the Income-tax Act, 1961 for faceless assessments includes an opportunity for hearing; denial of the requested mode of hearing resulted in absence of the hearing opportunity. Prior decision of the Court addressing faceless assessments and non-grant of hearing was applied to the facts.

Conclusion: The reassessment order dated 29.03.2022 passed under Section 147 read with Section 144B of the Income-tax Act, 1961 and the consequential demand under Section 156 of the Income-tax Act, 1961 are quashed and set aside for violation of principles of natural justice by not affording the petitioner the video conferencing hearing; the Revenue may proceed afresh from the stage of grant of video conferencing and must afford hearing in accordance with Section 144B of the Income-tax Act, 1961 within 12 weeks of receipt of the order.

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