NEUTRAL CITATION
C/SCA/16102/2021 ORDER DATED: 08/08/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 16102 of 2021
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RAJDHANI TEXTILES PVT. LTD.
Versus
THE NATIONAL FACELESS ASSESSMENT CENTRE
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Appearance:
MR TUSHAR HEMANI, SENIOR ADVOCATE WITH MS VAIBHAVI K
PARIKH(3238) for the Petitioner(s) No. 1
for the Respondent(s) No. 1
M R BHATT & CO.(5953) for the Respondent(s) No. 1
MR KARAN SANGHANI, ADVOCATE FOR MRS KALPANAK RAVAL(1046)
for the Respondent(s) No. 2
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CORAM:HONOURABLE MR. JUSTICE BIREN VAISHNAV
and
HONOURABLE MR. JUSTICE DEVAN M. DESAI
Date : 08/08/2023
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BIREN VAISHNAV)
1. By way of this petition under Article 226 of the Constitution of India, the petitioner has prayed for quashing and setting aside the assessment order dated 28.09.2021 for the assessment year 2013-14.
2. Facts in brief would indicate that the petitioner filed return of income for the assessment year 2013-14 on Page 1 of 18 Downloaded on : Sun Sep 17 00:38:25 IST 2023 NEUTRAL CITATION C/SCA/16102/2021 ORDER DATED: 08/08/2023 undefined 29.09.2013 declaring total income at Rs.1,35,97,340/-. The case of the petitioner was reopened by issuance of the notice under Section 148 of the Income Tax Act, 1961 (for short 'the Act'). By a notice dated 16.02.2021, issued under Section 142(1) of the Act, the petitioner was called upon to show cause as to why unsecured loans of the amount as noted in the notice should not be added to the total income of the petitioner. The petitioner was called upon to produce parties for verification of creditworthiness and genuineness of transactions and identities of the parties.
2.1 On 22.02.2021, the petitioner furnished a reply to the notice. It was the case of the petitioner that he was ready to produce the two persons in question through video conferencing. Accordingly, a request was made on the online portal of the department on 13.04.2021. In response to the online request made on 13.04.2021, the respondent issued a notice on 10.08.2021. Since the online request was not visible on the ITBA portal, a Page 2 of 18 Downloaded on : Sun Sep 17 00:38:25 IST 2023 NEUTRAL CITATION C/SCA/16102/2021 ORDER DATED: 08/08/2023 undefined request was once again made to the department vide email dated 19.08.2021 by which it was brought to the notice of the department that the link for making request for video conferencing was not operational / visible. An application for adjournment was also filed. A mail was received on 31.08.2021 whereby the petitioner was asked to seek adjournment using the adjournment feature. To this, the petitioner responded that the link is not visible on the new income tax website.
2.2 On 20.09.2021, the respondent prepared a draft assessment order determining the total income of the petitioner at Rs.4,90,97,340/- and sent the same through a show-cause notice. A request was made by the petitioner for personal hearing. A detailed reply was filed on 22.09.2021. A notice was issued on 23.09.2021 informing the petitioner that the personal hearing was fixed on 24.09.2021. The petitioner was ready for hearing however, as a result of technical glitches the video conferencing could not be conducted. The video Page 3 of 18 Downloaded on : Sun Sep 17 00:38:25 IST 2023 NEUTRAL CITATION C/SCA/16102/2021 ORDER DATED: 08/08/2023 undefined conferencing was therefore rescheduled on 27.09.2021 at 12.30 pm and when the petitioner was ready to join once again he could not join as a result of same technical glitches. On the very date the petitioner again made an online request for another opportunity of personal hearing. However, vide order dated 28.09.2021, which is impugned in this petition, an assessment order under section 147 read with section 144B of the Act was passed.
3. Mr. Tushar Hemani, learned Senior Counsel appearing with Ms. Vaibhavi Parikh, learned advocate for the petitioner would submit the following:
(a) That pursuant to the notice dated 16.02.2021 issued under section 142(1) of the Act, the petitioner immediately on 22.02.2021 furnished a detailed reply. A request for video conferencing was made on 13.04.2021. That by a request made in April 2021, the respondents only issued a notice for hearing after four months on 10.08.2021. It was further submitted that though it was Page 4 of 18 Downloaded on : Sun Sep 17 00:38:25 IST 2023 NEUTRAL CITATION C/SCA/16102/2021 ORDER DATED: 08/08/2023 undefined pointed out on 13.04.2021 specifically drawing the attention of the respondent that the video conferencing button does not allow the petitioner to request for access it was only after four months that a request for renewal was made.
(b) That on 19.08.2021 it was pointed out that the link for making request for video conferencing is not available on the new income tax portal and therefore the proceedings be adjourned. On 31.08.2021 too it was pointed out that the link for hearing is not available. Despite this fact, a show-cause notice was issued on 20.09.2021.
(c) Inviting the court's attention to the representation made on 22.09.2021 and to para 4.6 of the same where request was made to provide for opportunity of personal hearing, it is submitted that despite these requests wherein it was brought to the notice of the authorities that personal hearing be given on 23.09.2021, by a response dated 23.09.2021, a link was sent for the Page 5 of 18 Downloaded on : Sun Sep 17 00:38:25 IST 2023 NEUTRAL CITATION C/SCA/16102/2021 ORDER DATED: 08/08/2023 undefined petitioner to join on 24.09.2021 at 03.30 pm. The respondent was informed that due to technical glitches the meeting could not be initiated and it was over before the petitioner could present his case. Accordingly, a rescheduled video conference was slated on 27.09.2021 at 12.30 pm which also the petitioner could not join and therefore immediately an e-filing request was responded that there too there were technical glitches and therefore a rescheduled hearing was requested for. Despite this, the authority went ahead and passed the impugned assessment order. He would draw the court's attention to the screen shot of the relevant date to support his case that no video conferencing hearing could take place.
4. Mr. Karan Sanghani, learned advocate appearing on behalf of Ms. Kalpana Raval, learned advocate for the respondent authorities would submit that the assessee's request for video conferencing was granted on 24.09.2021 at 03.30 pm but the same could not be conducted due to technical glitches. Though an Page 6 of 18 Downloaded on : Sun Sep 17 00:38:25 IST 2023 NEUTRAL CITATION C/SCA/16102/2021 ORDER DATED: 08/08/2023 undefined opportunity thereafter was granted on 27.09.2021 at 12.30 pm and the video conferencing in fact started, the assessee did not join the video conferencing and after waiting for 15 minutes the video conferencing was concluded. He would invite the court's attention to the communication dated 24.09.2021 which was a letter rescheduling the video conferencing for 27.09.2021 and he would submit that the process to access video conferencing was specifically set out in the communication where it was made clear that the petitioner had to click on the hyperlink. He would submit that having given various opportunities to the petitioner to appear during the video conferencing, it was now not open for the petitioner to plead that there was violation of principles of natural justice.
5. Having heard learned advocates for the respective parties, what needs to be considered in fact is whether by denying the benefit of video conferencing, principles of natural justice have at all been violated. The vital dates Page 7 of 18 Downloaded on : Sun Sep 17 00:38:25 IST 2023 NEUTRAL CITATION C/SCA/16102/2021 ORDER DATED: 08/08/2023 undefined which need to be taken into consideration are as under:
16.02.2021 - Notice was issued under section 142(1) calling for various details 22.02.21 - Detailed reply was furnished along with documentary evidences 20.09.21 - Show cause notice was issued with a direction to file response by 22.09.21 22.09.21 - Detailed reply was furnished along with documentary evidences. The petitioner also requested for video conferencing. 24.09.21 - Video conference scheduled on 24.09.21 could not be conducted owing to technical glitches at the end of the Department. 27.09.21 - Video conference was scheduled on 27.09.21 but again, owing to technical glitches, the petitioner could not join the video conference 27.09.21 - The petitioner made an online request for another opportunity of personal hearing 28.09.21 - The petitioner brought it to the Page 8 of 18 Downloaded on : Sun Sep 17 00:38:25 IST 2023 NEUTRAL CITATION C/SCA/16102/2021 ORDER DATED: 08/08/2023 undefined notice of the respondent that till then, notice for personal hearing through VC scheduled on 27.09.21 was not appearing on the portal. Petitioner requested for another opportunity for explaining the case through VC 28.09.21 - Impugned assessment order was passed by the respondent 30.09.21 - Last date for framing the assessment under section 147 r.w.s 144B
6. What is apparent from the gist of dates and the arguments made by learned counsel for the petitioner is that first in point of time a notice was issued to the petitioner under section 142(1) of the Act on 16.02.2021. Immediately, thereafter on 22.02.2021, the petitioner had made a representation to the National Faceless Assessment Center, New Delhi explaining and denying the contents of the notice. Therein a specific request was made that in case of any adverse opinion, a chance be provided to explain through video conferencing. For a Page 9 of 18 Downloaded on : Sun Sep 17 00:38:25 IST 2023 NEUTRAL CITATION C/SCA/16102/2021 ORDER DATED: 08/08/2023 undefined considerable period of time, the option for request of video conferencing was not available on the new income tax portal. No notice was issued for hearing for over 7 months and directly a show-cause notice of 20.09.2021 was issued.
6.1 In the interregnum, on 13.04.2021, when a request was made to the authorities specifically pointing out that the petitioner intended to avail facilities of video conferencing for the production of two depositors but the button does not allow access to request for appointment, having waited for four months, by a letter dated 10.08.2021, the petitioner was informed to place video conferencing request with the monitoring portal. On 19.08.2021, the petitioner informed the authorities that the link for making a request for video conferencing is not yet operational and as a result of the same technical error, the petitioner is not able to file an application for adjournment. A similar request was made on 31.08.2021. Page 10 of 18 Downloaded on : Sun Sep 17 00:38:25 IST 2023
NEUTRAL CITATION C/SCA/16102/2021 ORDER DATED: 08/08/2023 undefined 6.2 On 24.09.2021, after the show-cause notice of 20.09.2021, detailed representation was made devoting an entire paragraph requesting for an opportunity of personal hearing pointing out that despite repeated attempts, the availability of functionality of seeking video conferencing had some technical glitches and therefore a fresh request for video conferencing was made. To that request which was specifically made for 23.09.2021, a notice was issued by the respondents fixing hearing at 03.30 pm on 24.09.2021 on which date also immediately the petitioner through e-proceedings response acknowledgement informed the department that meeting was completed even before the petitioner could present its case. The hearing was rescheduled for 27.09.2021 at 3.30 pm which also met the same fate to which the petitioner promptly informed through e-filing on the same date. A screen shot was also sent that the petitioner could not undertake the video conferencing as the link was not appearing on the portal.
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7. All these attempts would indicate that a genuine attempt was made by the petitioner for availing the facility of video conferencing with the respondents pursuant to the show-cause notice dated 20.09.2021. Preceding dates would indicate that the authorities only fast-tracked the process of video conferencing four months after the first request, in August - September due to the impending limitation of filing returns, losing sight of the fact that the petitioner was pursuing the authorities for a request for video conferencing and repeated attempts had failed as a result of technical glitches, as is evident from the sequence of dates narrated hereinabove.
8. As submitted by Mr. Tushar Hemani, learned Senior Counsel, a Division Bench of this court, albeit in somewhat different facts in Special Civil Application No. 4806 of 2022 in an oral judgement dated 29.08.2022 considering the provisions of Section 144B of the Act held as under:
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NEUTRAL CITATION C/SCA/16102/2021 ORDER DATED: 08/08/2023 undefined "8.We have heard learned advocates appearing for the respective parties and perused the impugned order as well as gone through relevant provisions of law. In order to adjudicate the issue involved with regard to providing opportunity of hearing, it would be germane to refer to the relevant provisions of section 144B of the Act, 1961 which reads as under :
"144B. (1) Notwithstanding anything to the contrary contained in any other provisions of this Act, the assessment under sub-section (3) of section 143 or under section 144, in the cases referred to in sub-section (2), shall be made in a faceless manner as per the following procedure, namely:--
xxx
(xiv) the assessment unit shall, after taking into account all the relevant material available on the record make in writing, a draft assessment order or, in a case 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 its judgment, either accepting the income or sum payable by, or sum refundable to, the assessee as per his return or making variation to the said income or sum, and send a copy of such order to the National Faceless Assessment Centre;
(xv) the assessment unit shall, while making draft assessment order, provide details of the penalty proceedings to be initiated therein, if any;
(xvi) the National Faceless Assessment Centre shall examine the draft assessment order in Page 13 of 18 Downloaded on : Sun Sep 17 00:38:25 IST 2023 NEUTRAL CITATION C/SCA/16102/2021 ORDER DATED: 08/08/2023 undefined accordance with the risk management strategy specified by the Board, including by way of an automated examination tool, whereupon it may decide to--
(a) finalise the assessment, in case no variation prejudicial to the interest of assessee is proposed, as per the draft assessment order and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee, along with the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment; or
(b) provide an opportunity to the assessee, in case any variation prejudicial to the interest of assessee is proposed, by serving a notice calling upon him to show cause as to why the proposed variation should not be made; or
(c) assign the draft assessment order to a review unit in any one Regional Faceless Assessment Centre, through an automated allocation system, for conducting review of such order;
xxx (xxii) the assessee may, in a case where show- cause notice has been served upon him as per the procedure laid down in sub-clause (b) of clause (xvi), furnish his response to the National Faceless Assessment Centre on or before the date and time specified in the notice or within the extended time, if any;
xxx 144B(7) For the purposes of faceless assessment xxx Page 14 of 18 Downloaded on : Sun Sep 17 00:38:25 IST 2023 NEUTRAL CITATION C/SCA/16102/2021 ORDER DATED: 08/08/2023 undefined
(vii) in a case where a variation is proposed in the draft assessment order or final draft assessment order or revised draft assessment order, and an opportunity is provided to the assessee by serving a notice calling upon him to show cause as to why the assessment should not be completed as per the such draft or final draft or revised draft assessment order, the assessee or his authorised representative, as the case may be, may request for personal hearing so as to make his oral submissions or present his case before the income-tax authority in any unit;
(viii) the Chief Commissioner or the Director General, in charge of the Regional Faceless Assessment Centre, under which the concerned unit is set up, may approve the request for personal hearing referred to in clause (vii) if he is of the opinion that the request is covered by the circumstances referred to in sub-clause (h) of clause (xii);
(ix) where the request for personal hearing has been approved by the Chief Commissioner or the Director General, in charge of the Regional Faceless Assessment Centre, such hearing shall be conducted exclusively through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony, in accordance with the procedure laid down by the Board;"
9.Section 144B of the Act, 1961 provides detailed procedure for Faceless Assessment introduced by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 with effect from 1st April, 2021. Section 144B(1) starts with a non-obstante clause i.e. "notwithstanding anything to the contrary contained in any other provisions of this Act, the Page 15 of 18 Downloaded on : Sun Sep 17 00:38:25 IST 2023 NEUTRAL CITATION C/SCA/16102/2021 ORDER DATED: 08/08/2023 undefined assessment under sub-section (3) of section 143 or under section 144, in the cases referred to in subsection (2), shall be made in a faceless manner..." as per the procedure prescribed therein.
10. The above-referred clause of section 144B(1) and 144B(7) deals with the procedure to be adopted by the National Faceless Assessment Centre on receipt of draft order from the assessment unit who has prepared the draft after providing opportunity to the assessee by serving a notice upon him to show cause as to why the assessment should not be completed as per such draft or final draft or revised draft assessment order. Therefore, such personal hearing in era of Faceless assessment is to be provided through video conferencing.
11. It is not in dispute that in facts of the case no draft assessment along with show cause notice as required under section 144B(1) and section 144B(7) is given to the petitioner so as to enable the petitioner to give explanation for proposed addition during the hearing before the National Faceless Assessment Centre. Section 144B(1)(xii) provides that on receipt of show cause notice, assessee may furnish his response to the National Faceless Assessment Centre and as per clause
(xiv), assessment unit shall make a revised draft assessment order after considering the response of the assessee and send it to the National Faceless Assessment Centre. As per the provisions of section 144B(7) in case of variation prejudicial to the assessee as proposed in the draft assessment order, the assessee is entitled to request for personal hearing and upon such request, the personal hearing may be provided by the authority, if the case of the assessee is covered by circumstances provided therein in exercise of powers under sub-clause (h) of clause (xii) of section 144B(7) of the Act, 1961.
12. In view of above, it can be safely be said that the Page 16 of 18 Downloaded on : Sun Sep 17 00:38:25 IST 2023 NEUTRAL CITATION C/SCA/16102/2021 ORDER DATED: 08/08/2023 undefined impugned order was passed by the respondent in violation of principles of natural justice without affording an opportunity of personal hearing by not following the prescribed procedure laid down as per the provisions of section 144B of the Act, 1961 for Faceless assessment.
13. In the result, this petition succeeds and is accordingly allowed. The impugned order of assessment passed by the respondent under Section 147 read with Section 144B of the Income Tax Act, 1961 dated 22.02.2022 and demand notice under section 156 of the Act of even date are quashed and set aside. The respondent/Revenue will be at liberty to proceed with assessment under the provisions of section 144B of the Act, 1961 as permissible under the law after issuance of show cause notice-cum-draft assessment order so as to provide an opportunity of hearing to the petitioner. The petitioner shall be given an opportunity of hearing as per the provisions of section 144B of the Act, 1961. Such exercise shall be completed within 12 weeks from the date of receipt of copy of this order."
9. For the aforesaid reasons, the assessment order dated 28.09.2021 is quashed and set aside. The respondent / Revenue will be at liberty to proceed with the assessment under Section 144B of the Act as permissible under law from the stage of inviting a response of the petitioner to the show-cause notice dated 20.09.2021 for the assessment year 2013-14 in light of his response dated 22.09.2021 and as prayed for therein give Page 17 of 18 Downloaded on : Sun Sep 17 00:38:25 IST 2023 NEUTRAL CITATION C/SCA/16102/2021 ORDER DATED: 08/08/2023 undefined an opportunity of personal hearing through video conferencing portal. Only after such request and the exercise of undertaking the process of personal hearing through video conferencing is done, after prior intimation to the petitioner through appropriate mode, the authorities would be free to pass a fresh order if necessary. Petition is accordingly allowed.
(BIREN VAISHNAV, J) (D. M. DESAI,J) DIVYA Page 18 of 18 Downloaded on : Sun Sep 17 00:38:25 IST 2023