Assessment under Section 144B set aside for denial of hearing; remitted for fresh assessment after full hearing

Assessment under Section 144B was set aside for breach of the principles of natural justice because the taxpayers request for a scheduled video hearing was not honoured before the assessment order was passed; consequence: the assessment order and consequent notices are quashed. The matter is remitted to the assessing officer at the stage of the show cause notice; consequence: the assessing officer must consider the taxpayers reply, deal with requests for production of documents obtained during enquiry and any request to invoke alternate assessment procedure, and thereafter pass a speaking order after fully hearing the taxpayer.

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Issues: Whether the assessment order passed on 17th March 2025, before the scheduled video-conference hearing on 25th March 2025 and despite a request for personal hearing, is vitiated for breach of principles of natural justice and Section 144B of the Income-tax Act, 1961.

Analysis: Section 144B(6)(vii) permits an assessee or authorised representative to request a personal hearing where variation is proposed, and Section 144B(6)(viii) requires that such hearing be allowed and conducted exclusively through video conferencing or video telephony. The facts establish that a request for a video-conference personal hearing was made by the assessee and that the hearing had been scheduled for 25th March 2025. The assessment order impugned was passed on 17th March 2025 prior to the scheduled hearing date. Given the statutory entitlement to a personal hearing on request and the pre-scheduled date for such hearing, the impugned order was issued without affording the procedure mandated by Section 144B and without providing the opportunity to make oral submissions; consequently the order and consequential notices are procedurally unsustainable. The matter is remitted to the Assessing Officer at the stage of the Show Cause Notice dated 7th February 2025 for reconsideration, including providing copies of replies under Section 133(6) and considering invocation of Section 144A, and for passing a speaking order after fully hearing the assessee through the proper video-conference mechanism.

Conclusion: The impugned Assessment Order dated 17th March 2025 and all notices issued pursuant thereto are set aside; the matter is remanded to the Assessing Officer to consider the assessee's replies and requests and to pass a speaking order after affording the requested video-conference personal hearing. This conclusion is in favour of the assessee.

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