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2025 (5) TMI 1416 - HC - Income TaxValidity of assessment order passed in violation of the principles of natural justice - HELD THAT - The respondents have sent two e-mail communications on 02.01.2025 and 07.01.2025 directing the petitioner to re-send the reply. The petitioner re-sent the reply on 17.01.2025 and thereafter the petitioner requested for video conferencing on 07.02.2025. However without considering the request by the petitioner and without providing any opportunity of hearing through video conferencing the present impugned order came to be passed on 13.03.2025. This Court is of the view that the impugned order is passed in violation of principles of natural justice and the same is liable to be set aside. Accordingly this Court passes the following directions/orders - (i) The impugned order dated 13.03.2025 is set aside and the matter is remanded to the authority concerned for fresh consideration. (ii) The first respondent is directed to provide an opportunity of hearing through video conferencing by issuing 14 days clear notice with proper communication and thereafter the first respondent is directed to pass a fresh assessment order in accordance with law.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court in this matter are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Violation of Principles of Natural Justice in Passing the Assessment Order Relevant Legal Framework and Precedents: The principles of natural justice require that no person should be condemned unheard (audi alteram partem). In tax assessment proceedings, the assessee must be given a reasonable opportunity of hearing before any adverse order is passed. The use of video conferencing as a mode of hearing is recognized and accepted, especially to facilitate ease of access and timely communication. Court's Interpretation and Reasoning: The Court examined the timeline and communications between the petitioner and the respondent authority. A show cause notice was issued on 28.11.2024, and the petitioner filed a reply by 04.12.2024. Subsequently, an opportunity for hearing through video conferencing was fixed on 30.12.2024 at 2:39 p.m. The petitioner's authorized representative logged in well before the scheduled time but found no representative of the respondent present, leading to the petitioner signing out after waiting for over 45 minutes. Key Evidence and Findings: The petitioner promptly notified the respondent of the non-appearance through emails dated 31.12.2024 and 06.01.2025, attaching screenshots as evidence. The respondent replied on 07.01.2025, requesting resubmission of documents, which the petitioner complied with on multiple occasions (17.01.2025, 31.01.2025, and 07.02.2025), along with renewed requests for video conferencing hearings. Despite these requests, the respondent passed the impugned order on 13.03.2025 without providing any further opportunity for hearing via video conferencing. Application of Law to Facts: The Court found that the failure of the respondent to appear at the scheduled video conference hearing and the subsequent passing of the order without granting a fresh opportunity of hearing amounted to a breach of the audi alteram partem rule. The petitioner was denied a fair chance to present its case, which is fundamental to natural justice in administrative and quasi-judicial proceedings. Treatment of Competing Arguments: The respondent contended that sufficient opportunities for hearing were provided and that video conferencing facilities were made available on multiple occasions. However, the Court noted that the petitioner's evidence of non-appearance by the respondent at the scheduled video conference was uncontroverted and that subsequent requests for hearing were ignored when the impugned order was passed. Conclusions: The Court concluded that the impugned order was passed in violation of natural justice principles and was therefore liable to be set aside. Issue 2: Adequacy of Notice and Opportunity for Hearing Through Video Conferencing Relevant Legal Framework and Precedents: Procedural fairness requires clear, timely, and adequate notice of hearings, including mode and timing, to enable the party to prepare and participate effectively. The use of video conferencing as a mode of hearing must be communicated clearly with proper technical arrangements. Court's Interpretation and Reasoning: The Court observed that the petitioner was given clear notice of the hearing date and time via intimation dated 09.12.2024. The petitioner complied by logging in early for the video conference. The petitioner's communication regarding the respondent's non-appearance was timely and substantiated. Key Evidence and Findings: The petitioner's multiple emails requesting rescheduling and hearing through video conferencing after the failed hearing attempt were not acted upon before passing the order. The respondent's failure to provide a fresh hearing opportunity despite these requests was a procedural lapse. Application of Law to Facts: The Court held that the respondent's failure to provide a subsequent opportunity of hearing after the petitioner's justified complaints amounted to inadequate procedural fairness. Treatment of Competing Arguments: The respondent's claim of having provided sufficient opportunities was negated by the petitioner's evidence of non-appearance and ignored requests for hearing. Conclusions: The Court directed that a fresh notice of hearing with at least 14 days' clear time be issued, ensuring proper communication and opportunity for video conferencing hearing. Issue 3: Appropriate Remedy for Violation of Natural Justice Relevant Legal Framework and Precedents: Where principles of natural justice are violated, the usual remedy is to set aside the impugned order and remit the matter for fresh consideration after affording the aggrieved party a proper opportunity to be heard. Court's Interpretation and Reasoning: The Court found it appropriate to set aside the impugned order dated 13.03.2025 and remand the matter to the assessing authority for fresh consideration in accordance with law. Key Evidence and Findings: The petitioner's consistent attempts to engage through video conferencing and the respondent's failure to provide a hearing opportunity justified the remedy. Application of Law to Facts: The Court's directions ensure compliance with natural justice and procedural fairness before any adverse order is passed. Treatment of Competing Arguments: The respondent's prayer for dismissal was rejected in view of the procedural irregularities. Conclusions: The Court ordered the impugned order to be set aside and the matter remanded with directions for fresh hearing through video conferencing with 14 days' notice. 3. SIGNIFICANT HOLDINGS The Court held:
Core principles established include the inviolability of the audi alteram partem rule in tax assessment proceedings and the mandatory requirement of providing a fair opportunity of hearing, including via video conferencing when requested and arranged. Final determinations:
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