Faceless assessment orders quashed for denying requested video conferencing hearing under natural justice principles

Kerala HC set aside faceless assessment orders for violating natural justice principles. The assessee specifically requested personal hearing through video conferencing, which was denied without consideration. Court held that statutory authorities must provide personal hearing opportunities when requested, even in faceless assessment proceedings. The denial constituted a procedural violation warranting judicial intervention under Article 226. The assessment orders were quashed due to failure to follow mandatory hearing procedures despite specific request for video conferencing facility.

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Issues:
Challenge to assessment order for Assessment Year 2018-19 based on lack of opportunity for personal hearing through video conferencing as per Income Tax Act, 1961.

Analysis:
The petitioner, a Banking Company, challenged an assessment order by the Income Tax Department for the Assessment Year 2018-19. The petitioner contended that the assessment order was passed without affording an opportunity for a personal hearing through video conferencing, as mandated by Section 143(3) of the Income Tax Act. The petitioner argued that under Section 144B (7) (vii), if a variation is proposed in the draft assessment order, the assessee has the right to request a personal hearing to present their case. The petitioner relied on a notification issued by the Ministry of Finance in support of this contention.

The respondents argued that the petitioner had the option to apply for a hearing through video conferencing when the show cause notice was issued, but the petitioner only filed a written reply without opting for a personal hearing. The respondents contended that the Faceless Assessing Officer (FAO) cannot initiate a personal hearing, and it was the assessee's responsibility to request it. The respondents also highlighted the availability of the statutory remedy of appeal under Section 246A of the Income Tax Act.

The Court noted that the Central Government had introduced a scheme for 'faceless assessment' to enhance efficiency and transparency in assessment proceedings. However, the Court emphasized that the petitioner's specific request for a personal hearing through video conferencing should have been considered, especially since no standards or procedures for approving such requests had been framed by the competent authority. The Court stressed the importance of adherence to principles of natural justice, emphasizing that no one should be condemned unheard.

In conclusion, the Court found that there was a violation of the principles of natural justice as the petitioner's request for a personal hearing was not considered. The Court held that the impugned orders must be set aside, and the statutory authorities were directed to pass fresh assessment orders after affording the petitioner a personal hearing through video conferencing. The Court allowed the writ petition in favor of the petitioner.

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