Facts of the Case

The petitioner filed a writ petition challenging the assessment order dated 30.05.2023 passed under Sections 147 read with 144B of the Income Tax Act, 1961 for Assessment Year 2018–19.

A show cause notice dated 22.05.2023 was issued proposing variation in income. The petitioner submitted its response on 24.05.2023 and highlighted difficulty in uploading complete books of accounts due to file size limitations.

A virtual hearing was scheduled for 26.05.2023; however, the petitioner requested rescheduling due to unavoidable circumstances. Subsequently, the Assessing Officer issued another communication dated 29.05.2023 requiring submission of documents by 30.05.2023. The petitioner contended that proceedings had already been closed earlier, rendering such communication meaningless.

Issues Involved

  1. Whether the assessment order passed under Sections 147 read with 144B is valid when principles of natural justice are violated.
  2. Whether denial of adequate opportunity, including personal hearing and submission of documents, vitiates the assessment proceedings.

Petitioner’s Arguments

  • There was a clear breach of principles of natural justice.
  • Adequate opportunity was not provided to present the case.
  • Technical constraints prevented uploading complete records.
  • The hearing was not properly accommodated despite request for rescheduling.
  • The proceedings were allegedly closed prematurely.

Respondent’s Arguments

  • The Revenue accepted notice and chose to argue based on available records.
  • It fairly conceded that if the facts presented were correct, there existed a breach of principles of natural justice.

Court Order / Findings

The Delhi High Court held:

  • There was a breach of principles of natural justice in the conduct of assessment proceedings.
  • The petitioner was not given adequate opportunity to present its case effectively.
  • The assessment order dated 30.05.2023 was liable to be set aside.

Order:

  • The impugned assessment order was set aside.
  • Liberty was granted to the Assessing Officer to pass a fresh assessment order.
  • Directions were issued to:
    • provide proper opportunity to the petitioner
    • issue fresh notice
    • allow personal hearing if requested

The writ petition was accordingly disposed of.

Important Clarification

  • Compliance with principles of natural justice is mandatory in assessment proceedings.
  • Faceless assessment under Section 144B does not dilute the requirement of fair hearing.
  • Denial of reasonable opportunity, including technical constraints and hearing requests, renders the assessment order invalid.
  • Authorities must ensure effective participation of the assessee before finalizing assessment.

 Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS18082023CW109422023_223959.pdf

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