TMI Blog2022 (1) TMI 1289X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the writ applicant had activated the video conference on 09.08.2021 and had requested for hearing on 16.08.2021. Thus, we have no hesitation in holding that inspite of specific request for personal hearing being requested by the writ applicant, the respondent authority without adhering to such request having proceeded to pass final assessment order, is in clear violation of the aforesaid statutory scheme and is therefore, held to be null and void and is hereby quash and set aside. In the result, the writ application succeeds. The matter is remanded back to the Assessing Officer and the Assessing Officer is hereby directed to grant an opportunity of personal hearing to the writ applicant by way of video conference. 12. In the result, the writ application succeeds. The matter is remanded back to the Assessing Officer and the Assessing Officer is hereby directed to grant an opportunity of personal hearing to the writ applicant by way of video conference. It is expected of the authority to serve advance notice giving 15 days time to the writ applicant while fixing date of personal hearing and thereafter, will be at liberty to pass a final assessment order in accordance wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t further prayed for personal hearing through video conferencing by invoking Section 144B(vii) and clause (xii) sub-clause (h) of the Act. 2.3 The respondent authority further issued intimation dated 23.04.2021 thereby offering the writ applicant an opportunity of hearing through video conference which was scheduled on 26.04.2021. It is the case of the writ applicant that on the date of hearing fixed i.e. 26.04.2021, due to technical issues and glitches, the writ applicant could not activate the video conference option as there was no option available on the web page to activate the video conference link. In such circumstances, the writ applicant could not joined the hearing scheduled on 26.04.2021. 2.4 The writ applicant thereafter, received a show cause notice dated 03.08.2021 whereby the writ applicant was asked to refer to FAQ of video conference hearing and accordingly, follow the procedure envisaged therein. Alternatively, it was stated that if the writ applicant does not opt for video conference as per the FAQ procedure within the compliance date as provided in the show cause notice, it will be presumed that the writ applicant does not want to excercise the option of v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsels appearing for the respective parties and have carefully perused the record as well as the decision of this Court relied upon by the learned counsel appearing for the writ applicant in the case of Agrawal JMC Joint Venture Vs. Assistant/Joint/Deputy/Assistant Commissioner of Income Tax/Income Tax Officer, dated 11.10.2021 passed in the Special Civil Application No.7477 of 2021. The only question which required to be answered by this Court is that whether the respondent authority have followed the due procedure of law as envisaged under Section 144B(7) (vii) and section 144B(7)(xii) of the Act, while passing the impugned final assessment order dated 12.08.2021. 6. Before going into the aforesaid issue, it would be apt to reproduce Section 144B of the Income Tax Act, which reads as under: Faceless Assessment. 144B. (1) Notwithstanding anything to the contrary contained in any other provisions of this Act, the assessment under sub-section (3) of section 143 or under section 144, in the cases referred to in subsection (2), shall be made in a faceless manner as per the following procedure, namely:- (i) the National Faceless Assessment Centre shall ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss Assessment Centre; (viii) where a request for conducting of certain enquiry or verification by the verification unit has been made by the assessment unit, the request shall be assigned by the National Faceless Assessment Centre to a verification unit in any one Regional Faceless Assessment Centre through an automated allocation system; (ix) where a request for seeking technical assistance from the technical unit has been made by the assessment unit, the request shall be assigned by the National Faceless Assessment Centre to a technical unit in any one Regional Faceless Assessment Centre through an automated allocation system; (x) the National Faceless Assessment Centre shall send the report received from the verification unit or the technical unit, based on the request referred to in clause (viii) or clause (ix) to the concerned assessment unit; (xi) where the assessee fails to comply with the notice referred to in clause (vi) or notice issued under sub-section (1) of section 142 or with a direction issued under sub-section (2A) of section 142, the National Faceless Assessment Centre shall serve upon such assessee a notice under section 144 giving him an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conducting review of such order; (xvii) the review unit shall conduct review of the draft assessment order referred to it by the National Faceless Assessment Centre whereupon it may decide to- (a) concur with the draft assessment order and intimate the National Faceless Assessment Centre about such concurrence; or (b) suggest such variation, as it may deem fit, in the draft assessment order and send its suggestions to the National Faceless Assessment Centre; (xviii) the National Faceless Assessment Centre shall, upon receiving concurrence of the review unit, follow the procedure laid down in- (a) sub-clause (a) of clause (xvi); or (b) sub-clause (b) of clause (xvi); (xix) the National Faceless Assessment Centre shall, upon receiving suggestions for variation from the review unit, assign the case to an assessment unit, other than the assessment unit which has made the draft assessment order, through an automated allocation system; (xx) the assessment unit shall, after considering the variations suggested by the review unit, send the final draft assessment order to the National Faceless Assessment Centre; (xxi) the National Faceless As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty 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 case the variations proposed in the revised draft assessment order are prejudicial to the interest of the assessee in comparison to the draft assessment order or the final draft assessment order, provide an opportunity to the assessee, by serving a notice calling upon him to show-cause as to why the proposed variation should not be made; (xxvi) the procedure laid down in clauses (xxiii), (xxiv) and (xxv) shall apply mutatis mutandis to the notice referred to in sub-clause (b) of clause (xxv); (xxvii) where the draft assessment order or final draft assessment order or revised draft assessment order is forwarded to the eligible assessee as per item (A) of sub-clause (a) of clause (xxiii) or item (A) of sub-clause (a) of clause (xxv), such assessee shall, within the period specified in sub-section (2) of section 144C, file his acceptance of the variations to the National Faceless Assessment Centre; (xxviii) the National Faceless Assessment Centre shall,- (a) upon recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake faceless assessment; (ii) Regional Faceless Assessment Centres, as it may deem necessary, to facilitate the conduct of faceless assessment proceedings in the cadre controlling region of a Principal Chief Commissioner, which shall be vested with the jurisdiction to make faceless assessment; (iii) assessment units, as it may deem necessary to facilitate the conduct of faceless assessment, to perform the function of making assessment, which includes identification of points or issues material for the determination of any liability (including refund) under the Act, seeking information or clarification on points or issues so identified, analysis of the material furnished by the assessee or any other person, and such other functions as may be required for the purposes of making faceless assessment; (iv) verification units, as it may deem necessary to facilitate the conduct of faceless assessment, to perform the function of verification, which includes enquiry, cross verification, examination of books of accounts, examination of witnesses and recording of statements, and such other functions as may be required for the purposes of verification; (v) technical uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section shall not apply to the enquiry or verification conducted by the verification unit in the circumstances referred to in sub-clause (g) of clause (xii) of sub-section (7). (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 electronic verification code in the prescribed manner; (ii) every notice or order or any other electronic communication shall be delivered to the addressee, being the assessee, by way of- (a) placing an authenticated copy thereof in the assessee s registered account; or (b) sending an authenticated copy thereof to the registered email address of the assessee or his authorised representative; or (c) uploading an authenticated copy on the assessee s Mobile App, and followed by a real time alert; (iii) every notice or order or any other electronic communication shall be delivere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 application software which supports video conferencing or video telephony at such locations as may be necessary, so as to ensure that the assessee, or his authorised representative, or any other person is not denied the benefit of faceless assessment merely on the consideration that such assessee or his authorised representative, or any other person does not have access to video conferencing or video telephony at his end; (xii) the Principal Chief Commissioner or the Principal Director General, in charge of the National Faceless Assessment Centre shall, with the prior approval of the Board, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 144 A provides that where a variation is proposed in the draft assessment order or final draft assessment order or revised draft assessment order, an opportunity is provided to the assessee by serving a notice calling upon him to show cause as to why the assessment should not be completed as per such draft or final draft or revised draft assessment order. The assessee or his authorised representative, as the case may be, may request for personal hearing so as to make his oral submissions 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 suit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 144 B(vii) according to the Delhi High Court, the provision cannot absolve the revenue from obligation cast upon it to consider the request made for grant of personal hearing. Where the revenue served a show cause notice-cum draft assessment order on assessee proposing to vary the income disclosed by the assessee and thereafter without affording a personal hearing to the assessee when passed the assessment order the same was quashed. 16.9 The relevant paragraphs discussing this aspect deserves 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 notice cum-draft assessment order dated 23-4-2021, a show cause 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, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nit set up, in automated and mechanised environment, including format, mode, procedure and process in respect of the following, namely: (h) circumstances in which personal hearing referred to clause (viii) shall be approved; 11.4 A careful perusal of clause (vi) of Section 144B (7) would show that liberty has been given to the assessee, if his/her income is varied, to seek a personal hearing in the matter. Therefore, the usage of 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 stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the authorities can be sorted out with proper understanding of the matter. In personal hearing and by oral submissions various aspects, operations/workings which could not be properly appreciated though inscribed under the responses can be resolved. In many a case, it would be possible to appreciate unrealised aspects during hearing and can be effectively explained. According to petitioner, this is precisely the reason as to why personal 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der sub-clause (a) of clause (xxiii), where response from an assessee is received, to send the same to the AU. 56. If there is response to show-cause notice, sub clause (b) of clause (xxiii) comes into operation pursuant to which matter goes to the AO and hearing assumes significance and is meaningful and the provision of subsection (7) clause (vi) would come into play. In case of response after show-cause notice, the matter would 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) shall be approved. 61. Legislature is not unwary of situations arising, requiring personal hearing and oral submissions and thus, has provided for the same under the faceless assessment scheme under section 144B. It emerges that where response is given by the assessee to showcause notice, the process under sub-section (7) would follow. 62. Learned senior counsel Mr.Pardiwala, during the course of hearing, had drawn attention 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l faceless Assessment centre, Delhi, reported in (2021) 127taxmann.com 637 (Delhi) and of the Bombay High Court in the case of M/s. Parimal Enterprise Ltd. Vs, Addl. Commissioner of Income tax, reported in (2021) 129 taxmann.com 18(Bombay), which has been followed by this Court in the case of Agrawal JMC Joint Venture Vs. Assistant/Joint/Deputy/Assistant Commissioner of Income Tax/Income Tax Officer, in the Special Civil Application No.7477 of 2021, it is no more res-integra that any order passed in violation of the statutory procedure prescribed under the section 144B of the act, makes order vulnerable as the same is passed in violation of rules of natural justice. So far as Section 144B of the Income Tax Act is concerned, the same has been inserted by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions), Act, 2020 with effect from 01.04.2021 where assessment under sub-section (3) of Section 143 or under Section 144 of the Income Tax Act, has been covered. The said addition is made under the heading Faceless Regim and the scheme of the Act reflects that the NFAC is authorized to serve upon the assessee a notice under Section 144 thereby giving him an oppo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
