Assessment order quashed for denying personal hearing opportunity under Section 144B and CBDT Circular 06.09.2021

Gujarat HC quashed an assessment order for violating natural justice principles by denying personal hearing opportunity. The jurisdictional AO rejected petitioner's hearing request claiming no video conference functionality. Court held that per Section 144B and CBDT Circular dated 06.09.2021, AO must provide personal hearing via video conference or in designated IT office area if technology unavailable. AO's contrary stance violated binding CBDT circular. Court rejected respondent's alternative remedy argument citing natural justice breach. Matter remanded to AO for proper hearing as per CBDT guidelines.

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Issues Involved:
1. Violation of principles of natural justice due to denial of personal hearing.
2. Jurisdictional authority to pass the assessment order.
3. Availability of alternative efficacious remedy.

Issue-wise Detailed Analysis:

1. Violation of principles of natural justice due to denial of personal hearing:
The petitioner argued that the assessment order dated 18.03.2024 was passed without providing an opportunity for a personal hearing, violating the principles of natural justice. Despite requests for personal hearings on 15.02.2024 and 08.03.2024, the respondent passed the order without granting such a hearing. The petitioner cited several decisions supporting the necessity of personal hearings, including Bharat Aluminium Company Ltd vs. Union of India [2022] 134 taxmann.com 187 (Delhi) and others.

The respondent contended that there was no functionality to conduct hearings through video conferences. However, the court noted that as per section 144B of the Act and the CBDT circular dated 06.09.2021, the Assessing Officer is required to provide personal hearings through video conference or, if not feasible, in a designated area of the Income Tax Office. The court found the respondent's contention contrary to the CBDT circular, which mandates personal hearings in such cases.

2. Jurisdictional authority to pass the assessment order:
The petitioner claimed that the impugned assessment order was passed without jurisdiction as the case was initially with the National Faceless Assessment Center. The petitioner argued that no notice regarding the transfer of the case under section 144B (8) was received, and the assessment order did not refer to any such transfer.

The respondent countered that the assessment was finalized by the National Faceless Assessment Center on 18.01.2021, but following the order under section 263 dated 27.03.2023, the case was transferred to the jurisdictional Assessing Officer on 13.11.2023. The court found that the assessment proceedings were conducted pursuant to the order under section 263, and thus, the jurisdictional Assessing Officer had the authority to conduct the assessment.

3. Availability of alternative efficacious remedy:
The respondent argued that the petition should not be entertained due to the availability of an alternative remedy by appealing to the CIT(A) and further to the Appellate Tribunal. However, the court held that this contention was not tenable given the breach of natural justice principles by not providing a personal hearing as required by section 144B and the CBDT circular.

Conclusion:
The court concluded that the petitioner's right to a personal hearing was violated and the assessment order was passed without jurisdiction. The impugned assessment order dated 18.03.2024 was quashed and set aside. The matter was remanded back to the respondent Assessing Officer to provide an opportunity for a hearing either through video conference or in a designated area of the Income Tax Office, as per the CBDT circular dated 06.09.2021. This exercise was to be completed within twelve weeks from the receipt of the court's order. The rule was made absolute to the aforesaid extent, with no order as to costs.

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