Hiraben Pragibhai Tala v. Additional/Joint/Deputy/Assistant Commissioner Of Incometax/Income Tax Officer

IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/SPECIAL CIVIL APPLICATION NO. 18132 of 2021 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE A.J.DESAI andHONOURABLE MR. JUSTICE BHARGAV D. KARIA ========================================================== 1Whether Reporters of Local Papers may be allowedto see the judgment ?2To be referred to the Reporter or not ?3Whether their Lordships wish to see the fair copyof the judgment ?4Whether this case involves a substantial questionof law as to the interpretation of the Constitutionof India or any order made thereunder ? ========================================================== HIRABEN PRAGIBHAI TALA Versus ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOMETAX/INCOME TAX OFFICER ==========================================================Appearance:PARAM V SHAH(9473) for the Petitioner(s) No. 1MRS KALPANAK RAVAL(1046) for the Respondent(s) No. 2NOTICE SERVED for the Respondent(s) No. 1========================================================== CORAM:HONOURABLE MR. JUSTICE A.J.DESAI and HONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 14/06/2022 ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE A.J.DESAI) 1. Rule returnable forthwith. Learned advocate Mrs.Kalpana Raval waives service of notice of Ruleon behalf of the respondent No.2.Kalpana Raval waives service of notice of Ruleon behalf of the respondent No.2. 2. With the consent of learned advocates appearingfor the respective parties, present petition istaken up for final hearing today.for the respective parties, present petition istaken up for final hearing today. 3. By way of present petition under Article 226 ofthe Constitution of India, the petitioner hasprayed as under: the Constitution of India, the petitioner hasprayed as under: “A. This Hon’ble Court be pleased to allowthis petition and to call for the recordsof the proceedings, look into them and bepleased to issue a writ of certiorari orany other appropriate writ, order ordirection quashing the assessment orderpassed by the Respondent No.1 u/s.143(3)r.w.s. 254 read with section 144B dated20.09.2021 (ANNEXURE-A) and demand Noticedated 20.09.2021 issued u/s.156 (ANNEXURE-B);B. This Hon’ble Court be pleased to callfor the records of the proceedings, lookinto them and be pleased to issue a writ ofmandamus or any other appropriate writ,orderordirectiondirectingtherespondents to grant complete stay ofdemand arising out of assessment orderpassed u/s.143(3) r.w.s. 254 read withsection 144B dated 20.09.2021; C.Pending the hearing and final disposalof this application, this Hon’ble Court bepleasedtostayoperationandimplementation of the assessment order passed u/s.143(3) r.w.s. 254 read withsection 144B dated 20.09.2021 and furtherstay the recovery of demand in pursuance ofthe notice issued u/s. 156 dated20.09.2021;” 4. In response to the notice issued by this Court,the respondent No.2 has appeared through learnedadvocate Mrs. Kalpana Raval and has filed theaffidavit in reply. 5. Brief facts of the case are as under : 5.1The petitioner is earning agriculturalincome as well as having rental income from ahall and is being assessed at PAN No.ABJPT4267Cunder the Income Tax Act, 1961 (hereinafterreferred to as 'the Act, 1961'). The petitionerfiled her return of income for the assessmentyear 2006-2007 on 26.06.2006, declaring nettaxable income of Rs.1,13,020/- whereby theincome from business and profession was of Rs.(-)1,22,707/- (loss) and Long Term Capital Gainwas of Rs.2,35,727/-. 5.2 The petitioner filed revised return ofincome on 28.03.2007 declaring the same incomeexcept the change in opening and closing balanceof the capital. 5.3The case of the petitioner was selectedfor scrutiny assessment and the AssessingOfficer vide order dated 8.12.2008 framed final 5.1The petitioner is earning agriculturalincome as well as having rental income from ahall and is being assessed at PAN No.ABJPT4267Cunder the Income Tax Act, 1961 (hereinafterreferred to as 'the Act, 1961'). The petitionerfiled her return of income for the assessmentyear 2006-2007 on 26.06.2006, declaring nettaxable income of Rs.1,13,020/- whereby theincome from business and profession was of Rs.(-)1,22,707/- (loss) and Long Term Capital Gainwas of Rs.2,35,727/-. 5.2 The petitioner filed revised return ofincome on 28.03.2007 declaring the same incomeexcept the change in opening and closing balanceof the capital. 5.3The case of the petitioner was selectedfor scrutiny assessment and the AssessingOfficer vide order dated 8.12.2008 framed final assessment under Section 143(3) of the Act, 1961assessing total income of Rs.30,01,806/-. 5.4The assessee being aggrieved by theorder of Assessing Officer, filed appeal beforeCommissioner of Income Tax (Appeals)-II, whichwas dismissed on 18.03.2014. 5.5The assessee therefore, preferred anappeal before the Income Tax Appellate Tribunal(For short ‘the Tribunal’) on 15.05.2014. TheTribunal partly allowed the said appeal videorder dated 13.09.2019 by confirming only LTCGof Rs.3,14,052/- and referred the case back tothe Assessing Officer for fresh adjudication ofother assessed income. 5.6 The petitioner thereafter filed herwritten submissions on 11.12.2019 before therespondent No.2, requesting to give effect tothe order dated 13.09.2019 passed by theTribunal. It is the case of the petitioner thatthe submissions given by the petitioner wereneither considered nor mentioned by therespondent No.2 in any further communications.Thereafter, due to COVID-19 pandemic, theproceedings remained standstill. 5.7Thereafter notice dated 11.03.2021under section 142(1) of the Act, 1961 was issuedby the respondent authorities to the petitioner directing the petitioner to furnish the balancesheet and Profit & Loss Account with closing andopening balance on or before 17.03.2021. It isthe case of the petitioner that the said noticewas furnished online and it was nevercommunicated to the petitioner and thepetitioner came to know about the said noticeonly in the month of August and the petitionerthereafter, immediately filed her detailed replybefore the respondent No.2 on 11.08.2021. 5.8It is the case of the petitioner thatthe petitioner subsequently came to know thatall the replies to the notice are to be filedon-line at e-portal of the respondentauthoritiesandhence,thepetitionerimmediately filed the reply on e-portal on thesame day i.e. 11.08.2021 and some additionaldocuments were filed two days later i.e. on13.08.2021. 5.9The respondent No.1 issued anothernotice dated 30.08.2021 under Section 142(1) ofthe Act, 1961 on e-portal asking the petitionerto furnish accounts and certain documents on orbefore 06.09.2021 by 6.12 p.m. It is the case ofthe petitioner that the respondent No.1 withoutverifying the details furnished by the assesseeissued a show-cause notice dated 06.09.2021 one-portal proposing addition of Rs.25,74,734/-and asked the petitioner to submit the details on or before 09.09.2021. It is further the caseof the petitioner that in a short span of just 3days, it was not possible for the petitioner tosubmit response to the said show-cause noticeand therefore, the petitioner sought adjournmenttill 23.09.2021. 5.10On 16.09.2021, the petitioner submittedher written submission alongwith supportiveevidences on e-portal of the respondent No.1. on or before 09.09.2021. It is further the caseof the petitioner that in a short span of just 3days, it was not possible for the petitioner tosubmit response to the said show-cause noticeand therefore, the petitioner sought adjournmenttill 23.09.2021. 5.10On 16.09.2021, the petitioner submittedher written submission alongwith supportiveevidences on e-portal of the respondent No.1. 5.11 It is the case of the petitioner thatthe respondent no.1 passed impugned order on20.09.2021 and raised demand Notice underSection 156 of the Act, 1961 without grantingany opportunity or personal hearing to thepetitioner. It is also the case of thepetitioner that the date of demand was raisedback on 15.09.2021 which is before theassessment order dated 20.09.2021. Hence, thepresent petition. 6. Learned advocate Mr. Param Shah appearing forthe petitioner would submit that there is abreach of mandatory provision of section 144B(1)(xvi) of the Act, 1961. He would submit thatwithout serving any draft assessment order asprescribed under the Act, 1961, the impugnedorder has been passed. He, therefore, wouldsubmit that only on this ground alone theimpugned order is required to be quashed and set aside. 7. On the other hand, learned advocate Mrs. KalpanaRaval appearing for the respondent No.2 hasvehemently opposed the present petition andsubmitted that after examining the explanationsof the petitioner, the impugned order has beenpassed by the respondents and, therefore, nointerference is required by this Court and thepresent petition may be dismissed. Raval appearing for the respondent No.2 hasvehemently opposed the present petition andsubmitted that after examining the explanationsof the petitioner, the impugned order has beenpassed by the respondents and, therefore, nointerference is required by this Court and thepresent petition may be dismissed. 8. We have heard learned advocates appearing forthe respective parties and perused the impugnedorder as well as gone through relevantprovisions of law. In order to adjudicate theissue involved with regard to providingopportunity of hearing, it would be germane torefer to the relevant provisions of section 144Bof the Act, 1961 which reads as under :the respective parties and perused the impugnedorder as well as gone through relevantprovisions of law. In order to adjudicate theissue involved with regard to providingopportunity of hearing, it would be germane torefer to the relevant provisions of section 144Bof the Act, 1961 which reads as under : “144B. (1) Notwithstanding anything to thecontrary contained in any other provisionsof this Act, the assessment under sub-section (3) of section 143 or under section144, in the cases referred to in sub-section(2), shall be made in a faceless manner asper the following procedure, namely:—contrary contained in any other provisionsof this Act, the assessment under sub-section (3) of section 143 or under section144, in the cases referred to in sub-section(2), shall be made in a faceless manner asper the following procedure, namely:— xxx (xiv) the assessment unit shall, aftertaking into account all the relevantmaterial available on the record make inwriting, a draft assessment order or, in acase where intimation referred to in clause(xiii) is received from the Nationaltaking into account all the relevantmaterial available on the record make inwriting, a draft assessment order or, in acase where intimation referred to in clause(xiii) is received from the National Faceless Assessment Centre, make in writing,a draft assessment order to the best of itsjudgment, either accepting the income or sumpayable by, or sum refundable to, theassessee as per his return or makingvariation to the said income or sum, andsend a copy of such order to the NationalFaceless Assessment Centre; xxx (xiv) the assessment unit shall, aftertaking into account all the relevantmaterial available on the record make inwriting, a draft assessment order or, in acase where intimation referred to in clause(xiii) is received from the Nationaltaking into account all the relevantmaterial available on the record make inwriting, a draft assessment order or, in acase where intimation referred to in clause(xiii) is received from the National Faceless Assessment Centre, make in writing,a draft assessment order to the best of itsjudgment, either accepting the income or sumpayable by, or sum refundable to, theassessee as per his return or makingvariation to the said income or sum, andsend a copy of such order to the NationalFaceless Assessment Centre; (xv) the assessment unit shall, while makingdraft assessment order, provide details ofthe penalty proceedings to be initiatedtherein, if any; (xvi) the National Faceless AssessmentCentre shall examine the draft assessmentorder in accordance with the risk managementstrategy specified by the Board, includingby way of an automated examination tool,whereupon it may decide to— (a) finalise the assessment, in case novariation prejudicial to the interest ofassessee is proposed, as per the draftassessment order and serve a copy of suchorder and notice for initiating penaltyproceedings, if any, to the assessee, alongwith the demand notice, specifying the sumpayable by, or refund of any amount due to,the assessee on the basis of suchassessment; or (b) provide an opportunity to the assessee,in case any variation prejudicial to theinterest of assessee is proposed, by servinga notice calling upon him to show cause asto why the proposed variation should not bemade; or (c) assign the draft assessment order to areview unit in any one Regional FacelessAssessment Centre, through an automatedallocation system, for conducting review ofsuch order; xxx (xxii) the assessee may, in a case whereshow-cause notice has been served upon himas per the procedure laid down in sub-clause(b) of clause (xvi), furnish his response tothe National Faceless Assessment Centre onor before the date and time specified in thenotice or within the extended time, if any; xxx 144B(7) For the purposes of facelessassessment- xxx (vii) in a case where a variation isproposed in the draft assessment order orfinal draft assessment order or reviseddraft assessment order, and an opportunityis provided to the assessee by serving anotice calling upon him to show cause as towhy the assessment should not be completedas per the such draft or final draft orrevised draft assessment order, the assesseeor his authorised representative, as thecase may be, may request for personalhearing so as to make his oral submissionsor present his case before the income-taxauthority in any unit; (viii) the Chief Commissioner or theDirector General, in charge of the RegionalFaceless Assessment Centre, under which theconcerned unit is set up, may approve therequest for personal hearing referred to inclause (vii) if he is of the opinion thatthe request is covered by the circumstancesreferred to in sub-clause (h) of clause(xii); (ix) where the request for personal hearinghas been approved by the Chief Commissioneror the Director General, in charge of theRegional Faceless Assessment Centre, suchhearing shall be conducted exclusivelythrough video conferencing or videotelephony,includinguseofanytelecommunication application software which supports video conferencing or videotelephony, in accordance with the procedurelaid down by the Board;” (viii) the Chief Commissioner or theDirector General, in charge of the RegionalFaceless Assessment Centre, under which theconcerned unit is set up, may approve therequest for personal hearing referred to inclause (vii) if he is of the opinion thatthe request is covered by the circumstancesreferred to in sub-clause (h) of clause(xii); (ix) where the request for personal hearinghas been approved by the Chief Commissioneror the Director General, in charge of theRegional Faceless Assessment Centre, suchhearing shall be conducted exclusivelythrough video conferencing or videotelephony,includinguseofanytelecommunication application software which supports video conferencing or videotelephony, in accordance with the procedurelaid down by the Board;” 9. Section 144B of the Act, 1961 provides detailedprocedure for Faceless Assessment introduced bythe Taxation and Other Laws (Relaxation andAmendment of Certain Provisions) Act, 2020 witheffect from 1[st] April, 2021. Section 144B(1)starts with a non-obstante clause i.e.“notwithstanding anything to the contrarycontained in any other provisions of this Act,the assessment under sub-section (3) of section143 or under section 144, in the cases referredto in sub-section (2), shall be made in afaceless manner...” as per the procedureprescribed therein.procedure for Faceless Assessment introduced bythe Taxation and Other Laws (Relaxation andAmendment of Certain Provisions) Act, 2020 witheffect from 1[st] April, 2021. Section 144B(1)starts with a non-obstante clause i.e.“notwithstanding anything to the contrarycontained in any other provisions of this Act,the assessment under sub-section (3) of section143 or under section 144, in the cases referredto in sub-section (2), shall be made in afaceless manner...” as per the procedureprescribed therein. 10.The above-referred clause of section 144B(1)and 144B(7) deals with the procedure to beadopted by the National Faceless AssessmentCentre on receipt of draft order from theassessment unit who has prepared the draft afterproviding opportunity to the assessee by servinga notice upon him to show cause as to why theassessment should not be completed as per suchdraft or final draft or revised draft assessmentorder. Therefore, such personal hearing in eraof Faceless assessment is to be provided throughvideo conferencing.and 144B(7) deals with the procedure to beadopted by the National Faceless AssessmentCentre on receipt of draft order from theassessment unit who has prepared the draft afterproviding opportunity to the assessee by servinga notice upon him to show cause as to why theassessment should not be completed as per suchdraft or final draft or revised draft assessmentorder. Therefore, such personal hearing in eraof Faceless assessment is to be provided throughvideo conferencing. 11.It is not in dispute that in facts of the case C/SCA/18132/2021 JUDGMENT DATED: 14/06/2022 11.It is not in dispute that in facts of the case C/SCA/18132/2021 JUDGMENT DATED: 14/06/2022 no draft assessment along with show cause noticeas required under section 144B(1) and section144B(7) is given to the petitioner so as toenable the petitioner to give explanation forproposed addition during the hearing before theNational Faceless Assessment Centre. Section144B(1)(xii) provides that on receipt of showcause notice, assessee may furnish his responseto the National Faceless Assessment Centre andas per clause (xiv), assessment unit shall makea revised draft assessment order afterconsidering the response of the assessee andsend it to the National Faceless AssessmentCentre. As per the provisions of section 144B(7)in case of variation prejudicial to theassessee as proposed in the draft assessmentorder, the assessee is entitled to request forpersonal hearing and upon such request, thepersonal hearing may be provided by theauthority, if the case of the assessee iscovered by circumstances provided therein inexercise of powers under sub-clause (h) ofclause (xii) of section 144B(7) of the Act,1961. 12.In view of above, it can be safely be saidthat the impugned order was passed by therespondent in violation of principles of naturaljustice without affording an opportunity ofpersonal hearing by not following the prescribedprocedure laid down as per the provisions of section 144B of the Act, 1961 for Facelessassessment. 13.In the result, this petition succeeds and isaccordingly allowed. The impugned order ofassessment passed by the respondent undersection 143(3) read with section 254 read withsection 144B dated 20.09.2021 at Annexure-A anddemand notice under section 156 of the even dateat Annexure-B are quashed and set aside. Therespondent/Revenue will be at liberty to proceedwith assessment under the provisions of section144B of the Act, 1961 as permissible under thelaw after issuance of show cause notice-cum-draft assessment order so as to provide anopportunity of hearing to the petitioner. Thepetitioner shall be given an opportunity ofhearing as per the provisions of section 144B ofthe Act, 1961. Such exercise shall be completedwithin 12 weeks from the date of receipt of copyof this order. Rule is made absolute to the aforesaid extent.Direct service is permitted. It is made clear that we have not examined themerits of the case. (A.J.DESAI, J) (BHARGAV D. KARIA, J)