Facts of the Case

The petitioner, Karuna Abhushan Private Limited, challenged the assessment order dated 18.05.2023 passed by the Income Tax Department for Assessment Year 2017–18.

The petitioner contended that:

  • A detailed reply dated 14.05.2023 was submitted in response to the show cause notice dated 09.05.2023.
  • The Assessing Officer failed to consider the contents of the reply while passing the assessment order.
  • A request for personal hearing through video conferencing was made via the designated portal but was not granted.

The Revenue did not file any counter-affidavit to dispute these claims.

Issues Involved

  1. Whether non-consideration of the petitioner’s reply violates principles of natural justice.
  2. Whether denial of opportunity of hearing through video conferencing renders the assessment order invalid.
  3. Whether the assessment order passed under the faceless assessment scheme can be sustained without procedural compliance.

Petitioner’s Arguments

  • The assessment order was passed without considering the detailed reply submitted on 14.05.2023.
  • The petitioner’s request for adjournment and video conferencing hearing was ignored.
  • This amounted to a clear violation of principles of natural justice.
  • The faceless assessment mechanism does not dispense with the requirement of fair hearing.

 Respondent’s Arguments

  • The Revenue sought time to verify whether the request for video conferencing was made.
  • Based on system logs, it was indicated that the request for video conferencing was received but not acted upon by the Faceless Assessing Officer.
  • However, no counter-affidavit was filed to formally rebut the petitioner’s claims.

Court Findings / Observations

  • The Court noted that:
    • The petitioner’s reply was acknowledged in the assessment order but its contents were not discussed.
    • The request for video conferencing was not denied by the Revenue and appeared supported by system logs.
    • No counter-affidavit was filed to contradict the petitioner’s assertions.
  • The Court held that:
    • There was a clear violation of principles of natural justice.
    • The failure to provide an opportunity of hearing and to consider the reply vitiated the assessment order.

Court Order

  • The impugned assessment order dated 18.05.2023 was set aside.
  • Liberty was granted to the Assessing Officer to pass a fresh assessment order in accordance with law.
  • The Assessing Officer must ensure compliance with principles of natural justice, including granting proper hearing.

Important Clarification

  • Even under the Faceless Assessment Scheme, procedural fairness remains mandatory.
  • Failure to consider taxpayer submissions or denial of hearing (including video conferencing) invalidates the assessment.
  • System logs can serve as crucial evidence in determining whether procedural rights were violated.

 Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS03102023CW91792023_171201.pdf

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