Andhonourable Mr. Justice Hemant M. Prachchhak v. Additional/ Joint/ Deputy/ Assistant Commissioner Of Incometax/ Income Tax Officer

IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/SPECIAL CIVIL APPLICATION NO. 14779 of 2021 FOR APPROVAL AND SIGNATURE: HONOURABLE MS. JUSTICE SONIA GOKANI andHONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK ==========================================================1Whether Reporters of Local Papers may be allowedYESto see the judgment ?2To be referred to the Reporter or not ?YES3Whether their Lordships wish to see the fair copyNOof the judgment ?4Whether this case involves a substantial questionNOof law as to the interpretation of the Constitutionof India or any order made thereunder ?==========================================================DR K R SHROFF FOUNDATION Versus ADDITIONAL/ JOINT/ DEPUTY/ ASSISTANT COMMISSIONER OF INCOMETAX/ INCOME TAX OFFICER ==========================================================Appearance:MR SAURABH SOPARKAR assisted by MR B S SOPARKAR(6851) for the Petitioner(s) No. 1M R BHATT & CO.(5953) for the Respondent(s) No. 1========================================================== CORAM: HONOURABLE MS. JUSTICE SONIA GOKANI andHONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK Date : 11/03/2022 CAV JUDGMENT (PER : HONOURABLE MS. JUSTICE SONIA GOKANI) 1.This is a petition under Article 226 read with Articles 19(1)(g) and 14 of the Constitution of India aggrieved by thenon-availment of the opportunity as required under the law,challenging the action of the respondent authority underSection 143(3) read with Section 144(B) of the Income TaxAct, 1961 (hereinafter referred to as ‘the Act’) assessing theincome of the petitioner for the year 2018-19 and raising thedemand of tax and penalty thereby vide order date17.09.2021. 2.The brief facts leading to the present petition are asfollows:- 2.1.The petitioner is a trust. The trusties and thebeneficiaries are individuals and citizens of India. It is a publictrust carrying on charitable activities under the BombayPublic Trust Act, 1950 registered on 19.01.2002. 2.2.The petitioner filed return of income for the assessmentyear 2018-19 on 26.10.2018 offering Nil income. The samewas offered on 10.05.2019 under Section 143(1) of the Act.The case of the petitioner was selected under CASS forComplete Scrutiny to verify some issues. Variouscorrespondences took place between the parties for thepurpose of framing of the assessment and the same eventuallyresulted into the issuance of show cause notice on 21.04.2021 reproducing the draft assessment order therein. 2.3.In response to the show cause notice, the petitioneruploaded reply on 26.04.2021 and also requested for personalhearing through video conferencing. The proposed time onthe part of the petitioner was from 4:00 pm. to 6:00 pm. onany working day. In response to this, on 25.05.2021 a showcause notice was issued which said that due to technicalerror, the request of personal hearing through videoconference could not be processed. The respondentacknowledged the reply and the request of personal hearing.It further directed to make a request for personal hearingthrough video conference through facility provided for thispurpose by clicking on the hyperlink under the column videoconferencing, through login at e-filing portal on or before28.05.2021 so that the personal hearing through videoconference can be provided. 2.4.The petitioner was unable to find any hyperlink on theIncome Tax Portal which could be activated for the purpose ofconfirming the virtual conference, therefore, he wrote fornumber of times to activate the hyperlink for making requestfor personal hearing. He submitted through various repliesdated 27.05.2021, 23.08.2021, 01.09.2021, 04.09.2021, 2.4.The petitioner was unable to find any hyperlink on theIncome Tax Portal which could be activated for the purpose ofconfirming the virtual conference, therefore, he wrote fornumber of times to activate the hyperlink for making requestfor personal hearing. He submitted through various repliesdated 27.05.2021, 23.08.2021, 01.09.2021, 04.09.2021, 07.09.2021 and 09.09.2021 that the link was not activated.Eventually on 13.09.2021 a letter was received fixing thepersonal hearing on 14.09.2021 at 12:09 p.m., leaving no timefor the petitioner to prepare. No hyperlink for activating thevideo conference was available online and instead the link tojoin the video conference along with password was provided. 2.5.It is the grievance of the petitioner that not only thehyperlink to activate the video conference was not availablebut the option to seek adjournment to the same videoconference was also not available on the web portal. Thegiven date and time of 14.09.2021 at 12:09 pm. wasinconvenient to the petitioner due to non-availability of theauthorized representative, however, due to system glitch atthe end of the respondent, the petitioner was not able to seekadjournment through the portal, therefore, the petitionerwrote an e-mail to request to reschedule the video conferenceto Friday on 17.09.2021 between 3:00 pm. to 5:00 pm. It wasreplied that the petitioner needs to seek adjournment onlinethrough web portal only and e-mail will not be responded. 2.6.It is the say of the respondent that the time of videoconference for the personal hearing was not changed despitethe legitimate request of the petitioner for keeping the personal hearing on 17.09.2021 and it was held on14.09.2021, therefore, the petitioner joined five minutesearlier than the time given on 14.09.2021, however, it hadstarted late due to technical glitch at the end of therespondent. The petitioner could not hear anything from theother side and while the petitioner made partial submissionsand it was making further submissions, the video conferencegot abruptly terminated. The petitioner requested to providepersonal hearing through video conference to complete thesubmissions vide letter dated 14.09.2021. 2.7.It is averred by the petitioner that it was shocking not toreceive any further communication regarding the videoconference and instead to receive the impugned assessmentorder dated 17.09.2021 without availing any opportunity ofpersonal hearing through video conference and in the saidassessment order, it has been mentioned surprisingly thatvideo conference was conducted although it was not properlyconducted, as emphatically averred and the petitioner was notallowed to make the fullest submissions. There is no referenceof the request of second personal hearing due to suddendisconnection. 2.8.The demand notice to pay Rs. 6,33,50,88,520/- within 30 days of the service of notice as well as the notice of penaltyunder Section 274 read with Section 270(A) dated 17.09.2021had been issued. The said assessment order issued underSection 143(3) read with Section 144(B) is under challenge.This is alleged to be an order without jurisdiction and violativeof principles of natural justice and contrary to law. 3.In response to the same, affidavit-in-reply is filed by theCommissioner of Income Tax (Exemption), Ahmedabaddenying all the averments. According to the respondent, thereis an alternative efficacious remedy available if the petitioneris aggrieved by the assessment order and can file an appealbefore the Commissioner of Income Tax (Appeals) andthereafter, challenge can lie before the Appellate Tribunal. Itis a settled law that the person aggrieved cannot abandon thestatutory mechanism stipulated under the Act. 3.In response to the same, affidavit-in-reply is filed by theCommissioner of Income Tax (Exemption), Ahmedabaddenying all the averments. According to the respondent, thereis an alternative efficacious remedy available if the petitioneris aggrieved by the assessment order and can file an appealbefore the Commissioner of Income Tax (Appeals) andthereafter, challenge can lie before the Appellate Tribunal. Itis a settled law that the person aggrieved cannot abandon thestatutory mechanism stipulated under the Act. 3.1.In case of Chhabil Dass Agarwal [357 ITR 357] the ApexCourt has permitted the challenge to the assessment order ona very limited ground. The sole challenge here is the violationof principles of natural justice as the opportunity of personalhearing averredly not provided. The said contention,according to the respondent, is baseless and has been deniedeventually. The video conference has been conducted, according to the respondent, on 14.09.2021 and the learnedcounsel for the petitioner also had joined. He raised similarcontentions during the course of the hearing which also formthe part of written submissions. Before framing theassessment, the concerned Assessing Officer had consideredthe submissions filed prior to the draft assessment order andthe detailed submissions made along with the voluminousevidences filed in response to the draft assessment as also thearguments advanced have been considered. 3.2.This is not a case of lack of jurisdiction nor violation ofprinciples of natural justice. According to the respondent,through the prism of element of prejudice test, the aspect ofviolation of principles of natural justice shall need to beconsidered. Since the assessment order clearly reflected thatthe representative of the petitioner was heard, his allegationsand averments would not hold the grounds on merit and thesubmissions written as well as oral made by the petitionerduring the course of the assessment proceedings have alreadybeen taken note of. 3.3.There had been para-wise denial which may not benecessary to be reproduced. The emphasis all along is that thematter does not deserve any consideration. 4.The affidavit-in-rejoinder is also filed where seriously thequestion is raised as to what amounts to the giving ofopportunity as required under the law. It is also reiteratedemphatically by the petitioner that the so called opportunitywas of namesake and at every stage, the faceless assessmentwas in fact ear-less assessment. 5.We have since noticed the reiterative submission oftechnical glitch which resulted into abrupt disconnection andreiterative emphasis on the same, we passed the followingorder on 12.10.2021 which deserves reproduction:- “We have heard today learned counsels on both thesides. During the course of hearing an issue that hadcropped up is in relation to the making available thecopy of the Video Conferencing which had beenrecorded on the date on which the hearing had takenplace. We are supplied with the FAQs for seeking VCand seeking VC adjournment where one of thequestions is as follows : “Would department provide the copy of therecording of video conferencing ? If yes, how toobtain the same ? Ans Yes, after video conferencing issuccessfully conducted.’VC’ recording’ hyperlinkwill be displayed under the “VC link details”column. Under the ‘VC recording’ hyperlink, theURL details from which the recording can bedownloaded will be mentioned. The status and VCrecording noting made by the Income TaxAuthority will be available under the “ITDremarks”. The recording will be made availablewithin a reasonable period, not exceeding twodays of recording. The recording can be downloaded from the portal through which thevideo conferencing was held. Steps to check the recording of videoconferencing availability and the URL details fromwhich it can be downloaded. Ans Yes, after video conferencing issuccessfully conducted.’VC’ recording’ hyperlinkwill be displayed under the “VC link details”column. Under the ‘VC recording’ hyperlink, theURL details from which the recording can bedownloaded will be mentioned. The status and VCrecording noting made by the Income TaxAuthority will be available under the “ITDremarks”. The recording will be made availablewithin a reasonable period, not exceeding twodays of recording. The recording can be downloaded from the portal through which thevideo conferencing was held. Steps to check the recording of videoconferencing availability and the URL details fromwhich it can be downloaded. 2. According to learned Advocate Mr. Soparkar therecording is to be made available within a reasonabletime not exceeding the two days of recording.According to him an attempt was made to download therecording which had taken place and the facility sincewas not available, it was not possible for him to availthe recording of the video conferencing that took place. 3. We noticed that the answer to the question in theFAQs supplied to us is quite clear that the recordingwill be made available within a reasonable period, notexceeding the two days of recording. “Recording can bedownloaded from the portal through which the videoconferencing was held.” We have noticed that stepshave been given to check the recording of the VC,availability and the URL details from which it can bedownloaded. 3.1 We would like to get more inputs in this regard andknow as to whether the recording of VC which hadtaken place with the petitioner would be available forviewing. If the request had not come on that day itself,because the answer as provided in the FAQs states thatproviding of such recording would be within areasonable time, not exceeding the two days ofrecording. In absence of any further details as to howlong such recording would be maintained by thedepartment, the details can be obtained by learnedSenior Advocate Mr. Bhatt on seeking necessaryinstructions in this regard. The said recording of videoconferencing if already available on the portal andprotected by the password, the details shall befurnished to the Court. 4. The matter is being posted on the 14.10.2021. 5. The further hearing on the aspect of the interimrelief which is being pressed into service shall be doneon that day. 6. The matter shall be kept on top ten matters. 7. Direct Service is permitted today. ” 5.1.As the receipt of the instructions and the availability ofthe video conference was taking a while and the demand ofpenalty under Section 274 read with Section 278(A) requiredthe payment within 30 days, this Court deemed it appropriateto pass the following order on 14.10.2021:- “1. Pursuant to the order passed by this Court on12.10.2021, both the sides have been heard today. 2. Learned Senior Advocate Mr. Bhatt has urged thatnecessary instructions which have been sought by himhave not come. The request has been made to theNational Faceless Centre. He is expecting theinstructions in relation to the availability of the VideoConference recording of dated 14.09.2021 by nextweek. The time therefore till 25.10.2021 is afforded forthe same to be received. 3. In the meantime, as the request has come from thepetitioner that notice of penalty under Section 274 readwith Section 278(A) dated 17.09.2021 requires thepayment to be done within 30 days, and the time isexpiring on 17.10.2021, according to the assessee,there will be serious consequences which will bedifficult for them to meet with. The request, therefore,is to stay the operation of the demand made by additionin the assessment order as well as the demand of noticeby virtue of the notice of penalty under Section 274 and278(A). 3. In the meantime, as the request has come from thepetitioner that notice of penalty under Section 274 readwith Section 278(A) dated 17.09.2021 requires thepayment to be done within 30 days, and the time isexpiring on 17.10.2021, according to the assessee,there will be serious consequences which will bedifficult for them to meet with. The request, therefore,is to stay the operation of the demand made by additionin the assessment order as well as the demand of noticeby virtue of the notice of penalty under Section 274 and278(A). 4. According to learned senior advocate Mr. Bhatt, asthe addition is huge and also the penalty amount runsinto crores of rupees, there should be a balance struckby the Court while acceding to the request and staying the same. He has urged that let an undertaking be filedby the petitioner and a specified portion be alsoearmarked from the property so that the recoveryeventually may not be difficult for the Revenue. He ishopeful to get the details of video recording in a week’stime. 5. Learned Senior Advocate Mr. S.N.Soparkar, onseeking instructions from the petitioner, has submittedthat so far as earmarking certain properties or thesubstantial amount while the Court decides this matter,it may take some time to seek instruction. However, fornow, the Court may accept undertaking in relation tothree fixed deposits of the petitioner Trust. 6. The matter is being posted on 25.10.2021 for boththe purposes i.e. for availing the recording of the videoconference dated 14.09.2021 as also for the petitionerto let the Court know of the security it offers for thedemand raised. 7. In the meantime, the three fixed deposits withHousing Development Finance Corporation Limitedeach of Rs.25,00,00,000/-, maturing on 23.04.2022, withthe amount of maturity of Rs.31,75,59,697/- in theKotak Mahindra Bank Ltd., Auda Garden, Ahmedabad,having Bank Account No.5612118006, MICR Code:380485016, IFSC CODE: , are beingfurnished as security, the details of which are as under:- 8. Learned Senior Advocate, Mr. Soparkar has additionally, on instructions, submitted that till thefurther order of the Court, these FDRs shall not bewithdrawn. An undertaking to that effect shall be alsofiled by the petitioner on or before 21.10.2021. 9. For now, the matter is being posted on 25.10.2021,accepting the version of learned Senior Advocate with adirection to the concerned bank to be sent through theregistry the undertaking given by the petitioner throughthe learned Senior Advocate for it not to permit therelease of FDRs till further order of the Court. 10. There shall be stay of demand of addition made inthe assessment order impugned and the demand ofpenalty till the next adjourned date. 11. Other and further order with regard to theadditional security for protecting the interest of theRevenue shall be passed on 25.10.2021 after hearingboth the sides.” 5.2.On completion of pleadings, this Court has heard atlength learned Senior Advocate Mr. Saurabh Soparkarassisted by learned advocate Mr. B.S.Soparkar for thepetitioner and learned Senior Advocate Mr. Manish Bhattassisted by learned advocate Mr. Karan Sanghani appearingfor the respondents and respective sides have strenuouslyattempted to bring home their respective stands. 5.3.Learned Senior Advocate Mr. Soparkar in support of hisdetailed submissions along the line of pleading has relied onthe following authorities, which are essentially addressing themerits:- (i)Saurashtra Education Foundation vs. Commissioner of Income-Tax [[2004]141 Taxman 26 (Gujarat)]Income-Tax [[2004]141 Taxman 26 (Gujarat)] (ii)Assistant Commissioner of Income-Tax vs. Surat City Gymkhana [[2008] 170 Taxman 612 (SC)]Gymkhana [[2008] 170 Taxman 612 (SC)] (iii)Hiralal Bhagwati vs. Commissioner of Income-tax [[2000]246 ITR 188]246 ITR 188] 5.3.Learned Senior Advocate Mr. Soparkar in support of hisdetailed submissions along the line of pleading has relied onthe following authorities, which are essentially addressing themerits:- (i)Saurashtra Education Foundation vs. Commissioner of Income-Tax [[2004]141 Taxman 26 (Gujarat)]Income-Tax [[2004]141 Taxman 26 (Gujarat)] (ii)Assistant Commissioner of Income-Tax vs. Surat City Gymkhana [[2008] 170 Taxman 612 (SC)]Gymkhana [[2008] 170 Taxman 612 (SC)] (iii)Hiralal Bhagwati vs. Commissioner of Income-tax [[2000]246 ITR 188]246 ITR 188] 5.4.Learned Senior Advocate Mr. Bhatt has ferventlydefended the department to urge that hue and cry made bythe respondent is to shrink the huge legal liability and aptopportunity is already given. 6.This Court has been made available the pen drive forwatching the video of VC conducted and that exercise wasconducted by this Court minutely and carefully. One glaringaspect we could notice was the amount of patience that wouldbe required at the end of the assessees and their authorized representatives in conducting the video conference.Transparency through faceless assessment is a very laudableobjective to be achieved which shall address variousundesirable aspects, however, this surely cannot put theassesses to jeopardy and more particularly, when the entiresystem is at a nascent stage. Here is a stage where the systemis in the making, where there are bound to be hiccups and there is a huge scope for improvisation. 7.We would have expected the administration to comeforward and also accept the limitations of the system. Oncethere is an acceptance of its limitations, there is a scope ofimprovisation and not otherwise. What means to be anopportunity of hearing or what amounts to the observations ofprinciples of natural justice need not be conveyed andexplained and told to the department and yet, we would like toquote the wisdom of the Apex Court on this aspect. InS.L.Kapoor vs. Jagmohan and Others [(1980) 4 SCC 379]after referring to certain English and Indian decisions, ofcourse in the context of that case, “In our view the principle ofnatural justice know of no exclusionary rule dependent onwhether it would have made any difference if natural justicehad been observed. The non-observance of natural justice isitself prejudice to any man and proof of prejudiceindependently of proof of denial of natural justice isunnecessary.” 7.1.Watching of the video itself is a reason for us to hold inno uncertain terms that not only there is a violation of theneed of availing opportunity of hearing but, there is surely arequirement of also paying heed to such complaints, often made and correct the system wherever needed. Why we sayso, we hereby give the following reasons. 8.It is a matter of record that the show cause notice dated21.04.2021 was responded to on 26.04.2021. The hearingthrough video conference was requested for between 4:00 pm.to 6:00 pm. on any working day, however, the show causenotice was received on 25.05.2021 in response to the saidrequest on 21.04.2021. This communication admits that dueto technical glitch, the request for video conference could notbe provided. It is further directed that for availing the videoconference clicking on the hyperlink under the column videoconference through login at e-filing portal on or before28.05.2021 should be done so that the personal hearingthrough video conference can be provided. 8.1.It is the grievance of the petitioner that it could not findany hyperlink on the Income-Tax Portal which could beactivated. It is also averred in the petition itself that throughvarious replies made on 27.05.2021, 23.08.2021, 01.09.2021,04.09.2021, 07.09.2021 and 09.09.2021 this aspects havebrought to the notice of the department. It is only on13.09.2021 the letter was received intimating the schedule ofpersonal hearing on 14.09.2021 at 12:09 pm. It was since a 8.1.It is the grievance of the petitioner that it could not findany hyperlink on the Income-Tax Portal which could beactivated. It is also averred in the petition itself that throughvarious replies made on 27.05.2021, 23.08.2021, 01.09.2021,04.09.2021, 07.09.2021 and 09.09.2021 this aspects havebrought to the notice of the department. It is only on13.09.2021 the letter was received intimating the schedule ofpersonal hearing on 14.09.2021 at 12:09 pm. It was since a day prior to the scheduled date of video conference, thepetitioner was not prepared to conduct the hearing throughvideo conference which is understandable and more so, as hewas being represented by an authorized representative beingthe senior advocate. Even if he is not represented by thelearned advocate, a day’s time may be insufficient for anyoneas all would have their prior commitments. 8.2.In any case, it is stated that no hyperlink for activatingthe video conference was available online and instead the linkto join video conference along with password was provided.Thus, the insistence on the part of the petitioner on a previousoccasion in its communication by way of notice dated25.05.2021 that for personal hearing through videoconference, the facilities can be availed as provided byclicking on the hyperlink under the column video conferenceand through login at e-filing portal does not appear to beworking and its challenge by the petitioner appears to befortified. 8.3.On 14.09.2021, in the affidavit-in-rejoinder thechronology of events during hearing through VC has beenprovided which is as follows as we have had an occasion torun through this video.:- C/SCA/14779/2021 CAV JUDGMENT DATED: 11/03/2022 9.We have watched the video as provided to us pursuant tothe directions issued by us as mentioned herein above and itis quite obvious that the learned senior advocate representingthe petitioner went on asking and also waited, however, fromthe other side, there was no reply. It is only after about 22:00minutes in the chat box, the reply was received that theauthorized person was audible and therefore, he could speak.A request was also made whether the submissions could beuploaded to which the answer is in affirmative however, therewas no facility for sharing the screens of submissions. It isalso quite clear that from 26:00 minutes to 40:00 minuteshearing continued and then from 40:52 minutes to 45:06minutes the audio was silent though the video went on andlearned counsel went on speaking on the first issue and at45:06 minutes, as rightly urged, the video of learned advocatewas abruptly terminated while learned advocate wasspeaking. 9.1.Even during the process of watching and also inquiringas to whether in fact what has been provided in the rejoindercategorically is as given by minute to minute and second tosecond, we have found that to be true and it would really tryanyone’s patience. The anonymity of a conductor of VCthough is a well accepted measure, but, merely because theState has authority to decide the manner of conducting, itcannot put the assessee to such a receiving end that it startsfeeling itself in a helpless situation. 9.1.Even during the process of watching and also inquiringas to whether in fact what has been provided in the rejoindercategorically is as given by minute to minute and second tosecond, we have found that to be true and it would really tryanyone’s patience. The anonymity of a conductor of VCthough is a well accepted measure, but, merely because theState has authority to decide the manner of conducting, itcannot put the assessee to such a receiving end that it startsfeeling itself in a helpless situation. 9.2.In Special Civil Application No. 7477 of 2021 also, thisCourt has held that the video conferencing is mandatory oncethe assessee seeks personal hearing. Non-providing of thesame is in violation of the principles of natural justice. Thepetitioner though has been provided the video conferencing,one would notice that the technical glitch at couple of timesand the opportunity which has been presently given is surelyinsufficient and incomplete. This surely is not in consonancewith the objective with which the legislature has brought thisfaceless assessment regime. It needs to be understood that tillthe system in place is robust and this happens over a period oftime, then there is a scope to move forward and strengthenthe same. 9.3.We could also notice that the material which has beenalready shared has not been in any manner reflected in thefinal order. After the supply of draft assessment order, thereason for providing the opportunity is to ensure that theother and further material and the submissions made on thepart of the petitioner also are given due regard. If availing anopportunity after once the draft assessment order ispreferred, is a mere formality, the importance of that stagepossibly has not recognized by the department. 10.We would like to refer to the Circular F No. PR.CCIT/NeAC/SOP/2020-21 dated 23.11.202 which is a StandardOperating Procedure (SOP) for personal hearing throughvideo conference under Faceless Assessment Scheme, 2019.The Principal Chief Commissioner of Income Tax, National e-assessment Centre, with the prior approval of the CentralBoard of Direct Taxes (CBDT), New Delhi, laid down thecircumstances in which the personal hearing through videoconference is allowed in the faceless assessment scheme.Where any modification is proposed in the draft assessmentorder issued by the AU and the Assessee or the authorizedrepresentative in her/his written response disputes the factsunderlying the proposed modification and makes a request for a personal hearing, the CCIT ReAC may allow personalhearing through video conference after considering the factsand circumstances where the assessee can submit writtensubmissions in response to the draft assessment order. Thevideo conference will ordinarily be of 30 minutes duration. Itmay be extended on the request of the assessee or theauthorized representative. The assessee also may furnishdocuments / evidences to substantiate the point raised in thevideo conference during the session or within reasonable timeallowed by the AU after considering the facts andcircumstances of the case. 11.As can be noticed from the instant case, here also, themodification is proposed in the draft assessment order and theassessee had requested for personal hearing. It is to be notedthat as averred in the petition, in a response to the showcause notice dated 21.04.2021 raising objections on26.04.2021, the petitioner has furnished the fresh documentswhich have been paged from 93 to 284 in its submission ofobjections, explanation and details. It has also answered tothe serious question raised questioning the creditworthinessof Arrow Electronics India Pvt. Ltd. It has also chosen tosubstantiate the uploading of these documents by variousdocuments furnished before this Court and also downloading 11.As can be noticed from the instant case, here also, themodification is proposed in the draft assessment order and theassessee had requested for personal hearing. It is to be notedthat as averred in the petition, in a response to the showcause notice dated 21.04.2021 raising objections on26.04.2021, the petitioner has furnished the fresh documentswhich have been paged from 93 to 284 in its submission ofobjections, explanation and details. It has also answered tothe serious question raised questioning the creditworthinessof Arrow Electronics India Pvt. Ltd. It has also chosen tosubstantiate the uploading of these documents by variousdocuments furnished before this Court and also downloading the details from the e-portal of Income Tax Department. Anattempt is made to show to this Court that in the finalassessment order which has been pronounced on 17.09.2021,there is no whisper of any of these materials. There is nochange made in the draft assessment order after theseadditional material has been sent. This also is indicative of thefact that the opportunity of hearing given after the requestmade on the receipt of the draft assessment order is mere aformality. Not only the time granted is of less than 24 hours,the non-response initially and disruption which eventuallyresulted into sudden snap of the link, never was thereafterresponded to, even when request was made on the part of thepetitioner for permitting the hearing which had remainedunconcluded. 12.The decision of High Court of Orissa in case of EliteEducation Society vs. Chairman, Central Board of DirectTaxes, Ministry of Finance, Department of Revenue andOthers [W.P. (C) No. 18472 of 2021] shall be necessary to bereferred to at this stage where the Court has held that therequirement for providing the hearing in terms of Section144(B)(7)(vii) is not merely directory but mandatory one. “5. The requirement for providing such hearing interms of Section 144 B (7) (vii) of the Income Tax Act, 1961 ('Act') is not merely directory, but a mandatoryone. It reads as under:- "144-B (7) For the purposes of faceless assessment-- "(vii) in a case where a variation is proposed in thedraft assessment order or final draft assessmentorder or revised draft assessment order, and anopportunity is provided to the assessee by serving anotice calling upon him to show cause as to why theassessment should not be completed as per the suchdraft or final draft or revised draft assessment order,the assess or his authorized representative, as thecase may be, may request for personal hearing so asto make his oral submissions or present his casebefore the income-tax authority in any unit." 6. Not only is the Assessee given a right to make arequest for personal hearing, but it is mandatory forthe authority to provide for such personal hearing. 7. With there being no dispute that the Petitioner didmake such a request, it was incumbent on theOpposite Parties to have given it an opportunity ofbeing heard. The reply filed by the Opposite Partiesonly deals with the merits of the assessment itselfand does not dispute that the above mandatoryprocedural requirement was not complied with. 8. In that view of the matter, on this short ground,the impugned assessment order is set aside and thematter is remanded to the assessing officer, i.e.National e-Assessment Centre, for compliance of themandatory requirement of Section 144 B (7) (vii) ofthe Act and provide a personal hearing to thePetitioner as requested by it on a date and time to beconveyed to it at least one week in advance. It ismade clear that the hearing can be in either physicalor virtual mode. A fresh assessment order shall bepassed thereafter within three months. If aggrievedby such order, it would be open to the Petitioner toseek appropriate remedies in accordance with law. 8. In that view of the matter, on this short ground,the impugned assessment order is set aside and thematter is remanded to the assessing officer, i.e.National e-Assessment Centre, for compliance of themandatory requirement of Section 144 B (7) (vii) ofthe Act and provide a personal hearing to thePetitioner as requested by it on a date and time to beconveyed to it at least one week in advance. It ismade clear that the hearing can be in either physicalor virtual mode. A fresh assessment order shall bepassed thereafter within three months. If aggrievedby such order, it would be open to the Petitioner toseek appropriate remedies in accordance with law. 9. The Court makes it clear that it has not expressedany view on the merits of the case, except on theabove limited procedural error of non-compliancewith the mandatory requirement of Section 144 B (7) (vii) of the Act.” 12.1. The decision of Bombay High Court in case of Piramal Enterprises Limited vs. Addl./Jt./Dy./Asstt.Commissioner of Income Tax/Income Tax Officer, Delhi[[2021] 129 taxmann.com 18 (Bombay)], where also the Courtheld that the faceless assessment is not made in accordancewith the procedure laid down under Section 144(B). There is atelling / pronounced rigour, to follow the procedure undersection 144B, lest the assessment would be non est. It furtherheld that as per the provisions of Section 144(B), when thehearing has been envisioned and incorporated, it is imperativeto observe the principles of natural justice as stipulated. 12.2.The High Court of Delhi in case of Sanjay Aggarwal vs. National Faceless Assessment Centre,Delhi [[2021] 127 taxmann.com 637 (Delhi)] held andobserved thus:- “11.3. In this context, if one were to look at therelevant provisions, [which, for the sake ofconvenience are extracted hereafter], then, onewould get a sense as to why the legislature hasprovided a personal hearing in the matter:"144B. Faceless assessment -relevant provisions, [which, for the sake ofconvenience are extracted hereafter], then, onewould get a sense as to why the legislature hasprovided a personal hearing in the matter:"144B. Faceless assessment - (1) xxx xxx xxx (7) For the purposes of faceless assessment-- xxx xxx xxx (vii) in a case where a variation is proposed inthe draft assessment order or final draft assessmentthe draft assessment order or final draft assessment order or revised draft assessment order, and anopportunity is provided to the assessee by serving anotice calling upon him to show-cause as to why theassessment should not be completed as per the suchdraft or final draft or revised draft assessment order,the assessee or his authorised representative, as thecase may be, may request for personal hearing so asto make his oral submissions or present his casebefore the income-tax authority in any unit; (viii) the Chief Commissioner or the Director General,in charge of the Regional Faceless AssessmentCentre, under which the concerned unit is set up,may approve the request for personal hearingreferred to in clause (vii) if he is of the opinion thatthe request is covered by the circumstances referredto in sub-clause (h) of clause (xii); xxx xxx xxx (xii) the Principal Chief Commissioner or thePrincipal Director General, in charge of the NationalFaceless Assessment Centre shall, with the priorapproval of the Board, lay down the standards,procedures and processes for effective functioning ofthe National Faceless Assessment Centre, RegionalFaceless Assessment Centres and the unit set up, inan automated and mechanised environment,including format, mode, procedure and processes inrespect of the following, namely:-- xxx xxx xxx xxx xxx xxx (xii) the Principal Chief Commissioner or thePrincipal Director General, in charge of the NationalFaceless Assessment Centre shall, with the priorapproval of the Board, lay down the standards,procedures and processes for effective functioning ofthe National Faceless Assessment Centre, RegionalFaceless Assessment Centres and the unit set up, inan automated and mechanised environment,including format, mode, procedure and processes inrespect of the following, namely:-- xxx xxx xxx (h) circumstances in which personal hearingreferred to clause (viii) shall be approved;xxx xxx xxx" [Emphasis is ours] 11.4. A careful perusal of clause (vii) of Section 144B(7) would show that liberty has been given to theassessee, if his/her income is varied, to seek apersonal hearing in the matter. Therefore, the usageof the word 'may', to our minds, cannot absolve therespondent/revenue from the obligation cast upon it,to consider the request made for grant of personal hearing. Besides this, under sub-clause (h) of Section144B (7)(xii) read with Section 144B Signature NotVerifiedBy:VIPINKUMARRAISigningDate:09.06.202100:54:32(7)(viii),therespondent/revenue has been given the power toframe standards, procedures and processes forapproving the request made for according personalhearing to an assessee who makes a request qua thesame. 11.5. In several matters, we have asked the counselsfor the revenue as to, whether any standards,procedures and processes have been framed fordealing with such requests. The response, which wehave got from the standing counsels including Mr.Chandra, is that, to the best of their knowledge, nosuch standards, procedures as also processes havebeen framed, as yet. Conclusion: 12. Therefore, in our view, given the aforesaid factsand circumstances, it was incumbent upon therespondent/revenue to accord a personal hearing tothe petitioner. As noted above, several requests hadbeen made for personal hearing by the petitioner,none of which were dealt with by therespondent/revenue. 12.1. The net impact of this infraction would be that,the impugned orders will have to be set aside. It isordered accordingly.” 13.We would, therefore, hold that the provisions which havebeen envisioned to bring transparency and accountability inthe system if are not observed as contemplated under the law,it will become imperative for the Court to intervene. 13.1. A detailed study on the subject of facelessassessment regime in India in comparison of the other foreign countries is brought on record by learned Senior AdvocateMr. Soparkar. The study eulogizes that “It is a revolutionarymove by the Indian Government to improve the taxtransparency by way of disconnecting the taxpayer and thetax authorities. The electronic correspondence, personalhearing through video conference and central point ofcontract aim to ease the representation process for thetaxpayers and tax authorities while maintaining objectivityand anonymity.” The comparative study has been taken takenwhile comparing with the six countries i.e. Australia, UK,USA, Canada, Netherlands and Singapore. The authorsummed up saying that some of the aspects newly introducedin India are nearly similar to the procedure prevailing in othercountries. On video conference, it says that personal hearingin India is through video conference and not in personwhereas in all other countries, there is no restriction to thenumber of hearings and there is no specific condition neededfor invoking the provision of personal hearing. The personalhearing also is in person and not limited to the videoconference. 13.2.From what is noticed from the VC conducted in theinstant case and as CBDT circular mandates a request for VChearing and personal hearing is not under contemplation nor 13.2.From what is noticed from the VC conducted in theinstant case and as CBDT circular mandates a request for VChearing and personal hearing is not under contemplation nor requested for by the petitioner. However, once suchopportunity of hearing through VC is available, it cannot befor namesake nor can that tire assessee or the authorizedrepresentative and must be given in its true spirit. There shallneed to be response for the person to be sure that he/she isnot talking to the screen and resultant outcome also mustbear its testimony. 14.In case of Hiralal Bhagwati vs. Commissioner ofIncome-tax [[2000] 246 ITR 188], the trust in question wasregistered as public charitable trust and was registered withthe office of Charity Commission under the provisionscontained under the Bombay Public Trust Act. The object ofthe trust was to help by giving financial aid to the employeesof the Gujarat Law Society, in cases of death of an employeeduring his/her services, illness or permanent disability whichincapacitates the employee to discharge his/her duties. Thetrust was denied exemption under Section 80(G) of the Act onthe ground that the object of the trust was to register onlythe employees of the assessee and therefore, the object couldnot be of the general public utility. The Income Tax Officerissued notice under Section 148 of the Act. The petitioner hadquestioned this notice as being without jurisdiction. The Courtheld that the registration of the charitable trust under Section 12(A) is not idle or empty formality. It required that not onlythe application to be filed in a prescribed form stating all thedetails but also the names and addresses of the trusties andmanagers to be furnished to serve the charitable purpose. TheCourt held that it is not necessary that the object must be toserve the whole mankind or all persons living in a country orprovince. Even if a section of public is given benefit, it cannotbe said that it is not a trust for charitable purpose in theinterest of public. It is not necessary that the public at largemust get the benefit. Considering the object of general publicutility, the matter needs to be decided. 14.1.According to this Court, this is an argument onmerit as on the ground of nonobservance of principles ofnatural justice the Court is choosing to relegate the matters tothe concerned authority, it would prefer not to enter into thisarena of merit. The same shall be reserved to be agitatedbefore the Income Tax Authorities and thereafter, ifeventuality arises in future. The other two decisions are alongthe line and therefore are not required to be diluted beingalong the very line. 15.With the aforesaid reasons, we are of the firm opinionthat this is a matter where the order needs to be quashed and the petitioner needs to be availed an opportunity afresh by therespondent from the stage where it was left. Accordingly, thepetition is Allowed. The order dated 17.09.2021 is quashedand set aside with all its consequences. Notice issued ofpenalty under Sections 274 and