Applewoods Estate Private Limited v. Additional/ Joint/ Deputy/ Assistant Commissioner Of Income Tax/ Income Tax Officer

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 20755 of 2022 ==========================================================APPLEWOODS ESTATE PRIVATE LIMITED VersusADDITIONAL/ JOINT/ DEPUTY/ ASSISTANT COMMISSIONER OF INCOMETAX/ INCOME TAX OFFICER ========================================================== Appearance: MR B S SOPARKAR(6851) for the Petitioner(s) No. 1MR.VARUN K.PATEL and DEV PATEL (3802) for the Respondent(s) No. 2SERVED BY RPAD (N) for the Respondent(s) No. 1========================================================== CORAM:HONOURABLE MS. JUSTICE SONIA GOKANIand HONOURABLE MRS. JUSTICE MAUNA M. BHATT Date : 22/12/2022 ORAL ORDER (PER : HONOURABLE MRS. JUSTICE MAUNA M. BHATT) 1.Rule. Mr. Varun Patel, learned advocate waives serviceof notice of rule on behalf of respondent No.2. 2.This petition is filed challenging the order dated21.9.2022, under Section 143(3) read with Section 144B of theIncome Tax Act, 1961 (“The Act” for short), passed byrespondent No.1, for assessment Year 2020-2021. In the orderdated 21.9.2022, the total income of the assessee has beenassessed at Rs.290,21,61,734/-. 3.The assessee is a private limited company engaged in business of development of real estate projects. The assesseefiled its return of income for A.Y.2020-2021 on 13.2.2021,declaring income at Rs.218,99,04,610/-. The said return wasselected for scrutiny and notices under Section 143(3) and142(1) were issued. The last notice issued was on 25.8.2022to which the assessee responded on 2.9.2022. It is the case ofthe assessee that with reply to the show cause dated21.3.2022, it sought for personal hearing. Once again, withthe reply dated 25.8.2022, video conference (V C) hearing wassought on 2.9.2922, through web portal. The screen shotplaced on record, supports the case of assessee that in responsedated 2.9.2022, the assessee sought for personal hearing withthe reason that matter requires explanation due to complexityof facts. Thereafter, one more opportunity of personal hearingwas sought vide communication dated 21.9.2022 seekingpersonal hearing. However, to the shock and surprise of theassessee, without acceding to the request of V C hearing, theorder under Section 143(3) read with Section 144B of the Actwas passed on 21.9.2022 for A.Y.2020-2021. The demandnotice under Section 156 dated 20.9.2022 has been issued andthe penalty notice under Section 274 read with 271AAC(1)dated 21.9.2022 was also served to the assessee. Aggrieved bythe action of the respondents not acceding to the request ofproviding an opportunity of personal hearing before passing anorder dated 21.9.2022, present petition is filed. 4.Heard Mr. B.S.Soparkar, learned advocate for thepetitioner and Mr. Varun Patel with Mr. Dev Patel, learnedadvocates for the respondents. 5.Mr. B.S.Soparkar, learned advocate for the petitionersubmitted that once the personal hearing was sought by theassessee, it was incumbent upon respondent No.1 to provideopportunity of personal hearing through video conference. Asthe request of the assessee has not been acceded to, theframing of assessment is dehors the principles of natural justiceand contrary to the provisions of the Act. He furthersubmitted that the procedure under Section 144B(6)contemplates that the assessee should be provided opportunityof personal hearing so as to make his oral submission orpresent his case before the income tax authority of the relevantunit. Also, where the request of personal hearing has beenreceived, the income tax authority of relevant unit shall allowsuch hearing through National Faceless Assessment Centre. Inthe present case, despite personal hearing was sought, thesame was not allowed before framing assessment and,therefore, the order passed under Section 143(3) with Section144B is dehors the provisions of law. 6.On the other hand, Mr. Varun Patel, learned seniorstanding counsel for the respondents relying upon the affidavit submitted that against the order under Section 143(3) with144B for A.Y.2020-2021 dated 21.9.2022, the assessee hasalternative remedy of appeal and, therefore, the petition maynot be entertained. He further submitted that before scrutinyassessment various notices under Section 143(3) and 142(1)were issued, to which the assessee filed detailed replies. Thereplies in detail filed were duly considered before passing theassessment order dated 21.9.2022. Thus, the due procedurecontemplated under the provisions of the Act has beenfollowed and there being no illegality, no interference is calledfor at this stage. 7.Having heard learned advocates for the respective parties,it is noticed that in the show-cause notice dated 25.8.2022 forA.Y.2020-2021 certain details were called for from the assessee.The very same notice reads as under: “You are hereby given an opportunity to showcause why proposed variation should not bemade and the assessment should not becompleted accordingly.cause why proposed variation should not bemade and the assessment should not becompleted accordingly. Kindly submit your response through yourregisterede-filingaccountatwww.incometax.gov.inby 11:00 hours of02/09/2022, whereby you may either: - a. accept the proposed variation; or b. file your written reply objecting to theproposed variation; or c. If required, in addition to filing writtenreply you may request for personal hearing soas to make oral submissions or present yourcase. The request can only be made byclicking the seek video conferencing buttonavailable against the SCN, in the view noticesof this proceeding in the e-proceedings tab onefiling portal. The request can be made onlybefore expiry of compliance date & timethrough video conference. In case no response is received by the giventime and date, the assessment shall be finalizedtaking into account the variation(2) statedabove.” 8.In response to the notice dated 25.8.2022, the assesseefiled its detailed reply on 2.9.2022 and also made a request ofvideo conference hearing with reason that the matter requiresexplanation due to complexity of the facts. The screen shot ofweb portal indicates the video conference hearing sought forby the assessee. However, the record shows that the samewas not acceded to, by the respondent and no opportunity of video conference hearing was provided to the assessee. Thereply affidavit dated 22.12.2022 does not dispute the abovefactual aspect. 9.In view of above facts, the order of assessment undersection 143(3) read with 144B dated 21.9.2022 deserves to bequashed and set aside and hereby quashed and set aside. Thedemand notice under Section 156 dated 20.9.2022 and penaltynotice under Section 274 read with Section 271AAC(1) is alsoquashed and set aside. 10.The assessment proceedings are restored to the file of theauthority from the stage of providing personal hearing to theassessee as sought for. Once the personal hearing has beengiven to the assessee, the assessee is expected to cooperate andassessing officer is at liberty to pass an order in accordancewith law as expeditiously as possible but not later than tenweeks from the date of receipt of the order. 11.We make it clear that we have allowed the petition andquashed the order of assessment and penalty as mentionedabove, only on the ground of breach of principles of naturaljustice, without going into the merits of the matter of theeither side. 12.The petition is therefore allowed to the above extent.Rule made absolute. No costs. (SONIA GOKANI, J) NAIR SMITA V. (MAUNA M. BHATT,J)