TMI Blog2021 (10) TMI 1317X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from the material which is available from the eportal of the Income Tax Department. In fact in the affidavit-in-reply itself there is a reference of such a request made by the petitioner which according to the respondent-revenue is impermissible as he has not exercised the option while responding to the notice and the draft assessment order on 06.04.2021. According to the revenue, on 06.04.2021 while responding to the request, there would have been a hyperlink AVAILABLE which he ought to have clicked and which he had missed out and therefore, if he makes any subsequent request for the same, the same is not sustainable. We notice from the clause (xii) of sub-section (7) of Section 144B of the IT Act laying down the standards, procedures and processes for effective functioning of the National Faceless Assessment Centre, Regional Faceless Assessment Centre and the Unit set up in an automated and mechanised environment by the Principal Chief Commissioner or the Principal Director General. There is nothing on the record which insists that on the day on which the reply is given, there is any prohibition to tender the subsequent reply in continuity. It also does not anywhere proh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a draft assessment order, which eventually become the final assessment order, as framed by the respondent on 21.04.2021, this Court needs to interfere in the impugned assessment order along with interference in the consequential demand of taxes and of penalty and the same are quashed and set aside. The matter is remanded back to the Assessing Officer, who shall grant an opportunity of personal hearing to the petitioner by way of the video conferencing and thereafter pass a reasoned order in accordance with law. - R/SPECIAL CIVIL APPLICATION NO. 7477 OF 2021 - - - Dated:- 11-10-2021 - HONOURABLE MS. JUSTICE SONIA GOKANI AND HONOURABLE MR. JUSTICE RAJENDRA M. SAREEN MR B S SOPARKAR FOR THE PETITIONER MRS MAUNA M BHATT FOR THE RESPONDENT JUDGMENT PER : HONOURABLE MS. JUSTICE SONIA GOKANI 1. The petitioner is before this Court under Article 226 of the Constitution of India challenging the order passed by the respondent under Section 143(3) of the Income Tax Act, 1961 ( the Act hereinafter) dated 21.04.2021 assessing the income of the petitioner at ₹ 107,42,69,470/- for the Assessment Year 2018-2019 on the ground that the same being an act whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) quash and set aside the impugned order at Annexure- A to this Petition; (b) pending the admission, hearing and final disposal of this petition, to stay implementation and operation of the order at Annexure- A to this petition and stay recovery of tax for A.Y. 2018-19; (c) any other and further relief deemed just and proper be granted in the interest of justice; (d) to provide for the cost of this petition. 4. This Court issued the notice on 15.06.2021. The Court on 29.06.2021 had called for the draft order dated 04.04.2021, which had been brought on the record. 5. Affidavit-in-reply by the respondent has come from the Income Tax Officer, Ward- 3(3)(1), Ahmedabad denying all averments raised in this petition. According to the respondent, if the petitioner is aggrieved by the Assessment Order, the alternative efficacious remedy is available by way of an Appeal to the CIT (Appeal) and thereafter, to the Appellate Tribunal as the statutory forum is created for redressal of the grievance, the writ petition is not to be entertained relying on the decision of the Apex Court rendered in case of CIT VS. Chhabildas Agrawal, reported in 357 ITR 357. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of his grievance and therefore, the Court need not entertain this. 6. Affidavit-in-rejoinder has been filed by the authorised signatory of the petitioner. According to the petitioner, the stand of the respondent is self contradictory so far as its emphasis on the guidelines for personal hearing is concerned, the CBDT Circular is dated 23.11.2020 for the video conference. The written submission is required to be furnished as per this SOP in response to the draft assessment order. The written submissions were submitted on 07.04.2021 on the part of the petitioner, and hence, the petition is in the line of SOP issued by the CBDT. There is no evidence to show the existence of any hyperlink as on 04.04.2021 nor has the respondent provided any SOP or CBDT guidelines under which the hyperlink was created and provided. The screenshot of the case history provided by the respondent shows the letter of the petitioner dated 07.04.2021, however, it does not show existence of any clickable hyperlink. 6.1 According to the petitioner, due to change in the entire ITBA Portal System and unavailability of the new system for more than a month, the petitioner was unable to access to the portal to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and infrastructure project developer since it is involved in the construction of highway, whose case had been processed under Section 143(1) of the Income Tax Act for the Assessment Year 2018-2019 by CPC, Bangalore on 05.11.2019 on a total income of Rs.Nil. The petitioner s case has been selected for the limited scrutiny and the issues for selection were refund claim and the contract receipt on fees. 10. The notice under Section 143(2) of the IT Act was issued electronically on 22.09.2019 and served upon the Assessee on its e-mail id registered with the department and its reply was fixed on 07.10.2019. 11. The notice under Section 142(1) of the IT Act along with the questionnaire also was issued on 30.01.2020, the compliance of which was on dated 14.02.2020. Another notice under Section 142(1) of the IT Act along with the questionnaire had been issued on 11.12.2020 sent through the electronic mode for compliance on 20.12.2020 under the faceless scheme. In reply to the notice dated 11.12.2020 under Section 142(1) on 24.12.2020 the point wise reply had been given by the petitioner. On 22.02.2021 in reply to the notice under Section 142(1) of 19.02.2021 had been given. On 08.01. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... video conferencing requests made by taxpayer after clicking the above link, will be available in the case History/Nothing screen in Assessment Proceedings. A link will be available to FAO in Case History/Notings against the Show Cause Notice row to schedule a VC. 13. This reiterative emphasis on the part of the respondent is of already having afforded the opportunity. There is an acquiescence by the petitioner, according to the respondent, of existence of the link which it has chosen not to avail. The proceedings have been initiated on 22.09.2019. According to the respondent, the petitioner was given an opportunity to show cause why the assessment should not be completed as per the draft assessment order. If the assessee desires to respond through the registered e-filing account, he could (a) accept the proposed modification; (b) file written reply objecting to the proposed modification and (c) if required, he may request for personal hearing so as to make oral submissions to present his case after filing of written reply. On approval of the request, personal hearing is permitted to be conducted exclusively through the video conference. It provided that if there is no respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime to be specified in the notice. Where the assessee fails to comply with the notice referred to in clause (4) or notice issued under sub-section (1) of Section 142 or with a direction issued under sub-section 2A of Section 142 as to why the assessment in his case should not be completed to the best of its judgment. The assessee shall also within the time specified in the notice is required to file the response or within such time as may be extended on the basis of an application in this regard. The Assessment Unit shall after taking into account the relevant material available on the record and make in writing as per Section 144 (1) XL the draft assessment order either accepting the income or sum payable by or sum refundable to the assessee and send a copy of such order to National Faceless Assessment Centre. 16.1 Worthwhile would it be to refer to Section 144 B (1) xvi, it clearly provides for the National Faceless Assessment Centre to examine the draft assessment order. There are three options one of which is to provide an opportunity to the assessee in case of any variation prejudicial to the interest of the assessee is proposed and the same is to be done by serving a notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an eligible assessee and proposes to make any variation which is prejudicial to the interest of said assessee, forward the draft assessment order or final draft assessment to such assessee; or (B) in any other case, finalise the assessment as per the draft assessment order or the final draft assessment order and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee, alongwith the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment; (b) in any other case, send the response received from the assessee to the assessment unit; 16.4 For the purpose of faceless assessment, sub-section (7) of Section 144B of the IT Act would require reproduction. (7) For the purposes of faceless assessment - (i) an electronic record shall be authenticated by- (a) the National Faceless Assessment Centre by affixing its digital signature; (b) assessee or any other person, by affixing his digital signature if he is required to furnish his return of income under digital signature, and in any other case, by affixing his digital signature or under electron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) if he is of the opinion that the request is covered by the circumstances referred to in sub-clause (h) of clause (xii); (ix) where the request for personal hearing has been approved by the Chief Commissioner or the Director General, in charge of the Regional Faceless Assessment Centre, such hearing shall be conducted excluively through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony, in accordance with the procedure laid down by the Board; (x) subject to the proviso to sub-section (6), any examination or recording of the statement of the assessee or any other person (other than statement recorded in the course of survey under section 133A of the Act) shall be conducted by an income-tax authority in any unit, exclusively through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony in accordance with the procedure laid down by the Board; (xi) the Board shall establish suitable facilities for video conferencing or video telephony including telecommunication applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or present his case before the income tax authority in any unit. Such request may be approved for personal hearing, if the Chief Commissioner or the Director General, In-charge of Regional Faceless Assessment Centre is of the opinion that the request is covered by the circumstances referred to in sub-clause (h) of clause (xii), where such request for personal hearing is approved, such hearing is required to be conducted exclusively through video conferencing or through video telephony including by use of any telecommunication software, which support the video conferencing or video telephony in accordance with the procedure laid down by the Court. The Board is required to establish the suitable facility for video conferencing as per clause (xii) of subsection 7 of Section 144B or video telephony including telecommunication application software which supports the video conferencing or video telephony to ensure that the assessee or its authorised representatives or any other person is not denied the benefit of faceless assessment mearly on the consideration that such assessee or its authorised representatives do not have access to the video conferencing or video telephony at a web sit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serves reproduction. 11. Having perused the record and heard the learned counsel for the parties, in our view, what has clearly emerged is, as follows: (i) That prior to the issuance of the how cause noticecum- draft assessment order dated 23-4-2021, a showcause notice-cum-draft assessment order was issued on 13-4 2021. In between these two dates, the petitioner had, on two occasions, i.e., 15-4-2021 and 20-4-2021, asked or personal hearing in the matter. (ii) After the show cause notice-cum-draft assessment order dated 23-4-2021 was issued, via which the petitioner was invited to file his response/objections, the petitioner, once again, while filing his reply, on 24-4-2021, asked for being accorded personal hearing in the matter. 11.1 The sum and substance of the requests made, is that, both before and after the issuance of the showcause notice-cum-draft assessment order dated 23-4- 2021, the petitioner continued to press the respondent/revenue to accord him a personal hearing, before it proceeded to pass the impugned assessment order. As noticed above, according to the petitioner, the request was made as the matter was complex and therefore, required some b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the word 'may', to our minds, cannot absolve the respondent/revenue from the obligation cast upon it, to consider the request made for grant of personal hearing. Besides under sub-clause (h) of Section 144B (7)(xi) read with Section 144B (7) (viii), the respondent/revenue has been given the power to frame standards, procedures and processes for approving the request made for according personal hearing to an assessee who makes a request qua the same. 11.5 In several matters, we have asked the counsels for the revenue as to whether any standards, procedures and processes have been framed for dealing with such requests. The response, which we have got from the standing counsels including Mr.Chandra, is hat, to the best of their knowledge, no such standards, procedures as also processes have been framed, as yet. Conclusion: 12. Therefore, in our view, given the aforesaid facts and circumstances, it was incumbent upon the respondent/revenue to accord a personal hearing to the petitioner As noted above, several requests had been made for personal hearing by the petitioner none of which were dealt with by the respondent/revenue. 12.1 The net impact of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing is included. 48. Perusal of provisions of section 144B(1), would envince, National Faceless Assessment Centre (NFAC), shall serve a notice on an assessee u/s. 143(2) of IT Act and assessee may file response within a period of fifteen days to NFAC and in the events referred to in clause (iii) (a), (b) or (c), NFAC is to intimate the assessee about that assessment would be completed according to procedure u/s. 144B(1). It is an indication of intention to give prominence to the procedure under section 144B(1). 49. Under sub-section (1) of section 144B, it appears to be prescribed that upon completion of process from clauses (i) to (xiii), the Assessment Unit (AU) is supposed to make a draft assessment order (DAO), after taking into account all relevant material available on record or to the best judgment in case of the matter falling under sub-clause (xiii) wherein the AU is intimated about failure of response from the assessee. 50. Clause (xvi) of section 144B(1) would show that, NFAC on examination of DAO would decide on further course of action to be taken, viz; NFAC may finalise assessment in accord with DAO if there is no variation prejudicial to interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... go back to the AU and pursuant to clause (xxiv) the AU is supposed to take into account response of the assessee and then a revised DAO (RDAO) emerges for further treatment in accordance with clause (xxv). 57. It appears that under clause (xv) sub-clause (a) item (A) contemplates similar treatment to an eligible assessee as in item (A) under clause (a) of clause (xxiii) and the matter has to be forwarded to the assessee in case variations proposed in the case of eligible assessee are not prejudicial to the interest in comparison to DAO or FDAO and in case of other assessees under item (B) of sub-clause (a) of clause (xxv), similar treatment as accorded under item (B) of sub clause (a) of clause (xxiii) is given if the RDAO is not prejudicial in comparison to DAO or FDAO. However, in case of variations irrespective of whether assessee is eligible assessee or other, are prejudicial to the interest of assessee in comparison to DAO or FDAO, there is a further provision for opportunity to the assessee by serving notice, to receive treatment mutatis mutandis in accordance with clauses (xxii), (xxiv) and (xv). 58. Sub-section (7) of section 144B for the purpose of faceless as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttention to 'Standard Operating Procedure (SOP) for Assessment Unit under Faceless Assessment Scheme, 2019 under Circular FNo.PR.CCIT/SOP/2020-21 dated 19-11-2020 providing for under its clause T, that reasonable time is to be given to an assessee to comply with principles of natural justice. He had also referred to Circular F. No. PR.CCIT/NCAC/SOP/2020-21 dated 23-11-2020 to contend that personal hearing is to be allowed when there is response to DAO. 63. Principles of natural justice firmly run through fabric of section 144B(1) of the Income-tax Act, 1961. Whenever DAO, FDAO is prejudicial to the interest of assessee or RDAO is prejudicial to the interest of assessee in comparison to DAO or FDAO, upon a response to show- cause notice, personal hearing for oral submissions or to present its case before income tax authority is strongly entwined in the provisions on a request from an assessee unless it is absurd, strategised and/or intended to protract assessment etc. It would also emerge from various decisions, referred to above, ordinarily, such a request would not be declined. Judgments cited on behalf of petitioner referred to hereinbefore give exposition on sign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner of 08.04.2021 as well as 15.04.2021. However, that would not in any manner question his conduct of requesting for the personal hearing in as much as that aspect is neither disputed nor belied from the material which is available from the eportal of the Income Tax Department. In fact in the affidavit-in-reply itself there is a reference of such a request made by the petitioner which according to the respondent-revenue is impermissible as he has not exercised the option while responding to the notice and the draft assessment order on 06.04.2021. 19.1 According to the revenue, on 06.04.2021 while responding to the request, there would have been a hyperlink AVAILABLE which he ought to have clicked and which he had missed out and therefore, if he makes any subsequent request for the same, the same is not sustainable. 20. We notice from the clause (xii) of sub-section (7) of Section 144B of the IT Act laying down the standards, procedures and processes for effective functioning of the National Faceless Assessment Centre, Regional Faceless Assessment Centre and the Unit set up in an automated and mechanised environment by the Principal Chief Commissioner or the Principal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and there were many hiccups in absence of the revenue having shown that the link was created at the relevant point of time and in absence of any material on that issue, when it recognises the fact that it had received the request of 07.04.2021, there was no earthly reason for it to have ignored it and not to avail the hearing. 23. The subsequent Guidelines for personal hearing through the video conferencing recommending dos and don ts cannot be taken into consideration by this Court for the simple reason that the authority which issued and the date from which they have come into practice is missing. Moreover, it is not even known whether this is for the internal circulation as in the public domain these Guidelines have not come, therefore, what presently would guide the case of the petitioner is the FAQs available for seeking the video conferencing and seeking the adjournment of the video conferencing, we hold that there has been a violation when the modified assessment order was to be passed by making an addition of nearly 107 Crore and when a specific request had gone on the 3rd day of issuance of notice from the petitioner and when the time for framing the assessment was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), there would be neither a breach of the principles of natural justice nor a denial of the reasonable opportunity. It is only if the court/tribunal finds that the furnishing of the report would have made a difference to the result in the case that it should set aside the order of punishment. 45. Keeping in view the aforesaid principles in mind, even when we find that there is an infraction of principles of natural justice, we have to address a further question as to whether any purpose would be served in remitting the case to the authority to make fresh demand of amount recoverable, only after issuing notice to show cause to the appellant. In the facts of the present case, we find that such an exercise would be totally futile having regard to the law laid down by this Court in R.C. Tobacco. 46. To recapitulate the events, the appellant was accorded certain benefits under the Notification dated 8-7-1999. This Notification stands nullified by Section 154 of the 2003 Act, which has been given retrospective effect. The legal consequence of the aforesaid statutory provision is that the amount with which the appellant was benefited under the aforesaid Notification becomes r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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