Gujarat High Court
Mukeshbhai Babarbhai Desai vs Income Tax Department Assessment Unit ... on 7 October, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/11346/2023 JUDGMENT DATED: 07/10/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 11346 of 2023
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
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Approved for Reporting Yes No
✔
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MUKESHBHAI BABARBHAI DESAI
Versus
INCOME TAX DEPARTMENT ASSESSMENT UNIT NATIONAL FACELESS
ASSESSMENT CENTRE & ANR.
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Appearance:
MR SUDHIR M MEHTA(2058) for the Petitioner(s) No. 1
MS SHAILEE S MEHTA(5873) for the Petitioner(s) No. 1
MS MAITHILI D MEHTA(3206) for the Respondent(s) No. 1,2
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 07/10/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE PRANAV TRIVEDI)
1. Heard learned advocate Mr. Sudhir Mehta for for the petitioner and learned Senior Standing Counsel Ms. Maithili Mehta for the respondent.
2. Rule returnable forthwith. Learned Senior Standing Counsel Ms. Maithili Mehta, waives service of notice of rule for and on behalf of Page 1 of 12 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:30:17 IST 2025 NEUTRAL CITATION C/SCA/11346/2023 JUDGMENT DATED: 07/10/2025 undefined the respondent.
3. Having regard to the controversy involved in this petition, which is in a narrow compass and with the consent of the learned advocates for the respective parties, the matter is taken up for final hearing.
4. By this petition under Article 226 / 227 of the Constitution of India, the petitioner has challenged and prayed for quashing and setting aside of the impugned notice dated 29.7.2022 under Section 148 of the Income Tax Act, 1961 (for short 'the Act') and consequential Assessment Order dated 19.5.2023 passed by Respondent under Section 147 read with Section 144B of the Act for the Assessment Year 2017-18.
5. The brief facts of this case are as under:
5.1 The petitioner had filed its return of income for Assessment Year 2017-18. A search under Section 132 of the Act was carried out in the case of Shri Jignesh Shah and Shri Sanjay Shah at Page 2 of 12 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:30:17 IST 2025 NEUTRAL CITATION C/SCA/11346/2023 JUDGMENT DATED: 07/10/2025 undefined Ahmedabad. During the course of search, it was found out that both the persons were managing and controlling multiple Companies and concerns, which were not carrying out any business activity and were providing accommodation entries of various kinds such as unsecured loans, share premium, bogus gains, etc. Subsequently, information in case of assessee was flagged on the Insight Portal. On the basis of the information available, it was found that the petitioner being assessee was one of the beneficiaries who had taken accommodation entries to the tune of Rs.90,19,964/-.
5.2 The respondent issued show-cause notice under Section 148A(b) of the Act on 26.5.2022. The respondent derived approval on 28.7.2022 under Section 151 of the Act on 28.7.2022 and order under Section 148A(d) of the Act was passed on 29.7.2022, subsequent to the direction of the Hon'ble Apex Court in case of Union of India v.Page 3 of 12 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:30:17 IST 2025
NEUTRAL CITATION C/SCA/11346/2023 JUDGMENT DATED: 07/10/2025 undefined Ashish Agrawal and others in Civil Appeal No. 3005/2022.
5.3 As a consequence of passing of order under Section 148A(d) of the Act, notice under Section 148 of the Act was issued on 29.7.2022. Subsequent to the notice, the respondent issued notice under Section 142(1) of the Act on 5.1.2023 as well as on 20.1.2023 calling for certain information with respect to the assessment proceeding. On 22.4.2023, the respondent issued a show-cause notice as to why the proposed variation should not be made and the assessment should not be completed in the ongoing assessment proceedings in the case of the petitioner for Assessment Year 2017-18. The petitioner responded by filing reply / objections on 26.4.2023 and simultaneously requested to provide video-conferencing as prescribed under Section 144B(7) of the Act. It is the case of the petitioner that the respondent passed assessment Page 4 of 12 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:30:17 IST 2025 NEUTRAL CITATION C/SCA/11346/2023 JUDGMENT DATED: 07/10/2025 undefined order under Section 147 read with Section 144B of the Act without providing video-conferencing to the petitioner, which is impugned in the present writ-petition.
6. Learned advocate Mr. Sudhir Mehta for the petitioner submitted that the assessment proceedings are dehors the principles of natural justice. The consideration of documents and reply filed by the petitioner giving explanation have been completely kept at bay. Mr. Mehta submitted that request for providing personal hearing through video conferencing was not acceded to by the Assessing Officer which aspect is mandatory in view of ratio laid down by this Court in the case of Gandhi Realties Pvt Ltd vs. ACIT., reported in (2021) 133 Taxmann.com 83. In wake of such submissions, Mr. Mehta learned advocate for the petitioner has prayed to allow the present writ-petition and to quash and set aside the impugned Assessment Order.
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NEUTRAL CITATION C/SCA/11346/2023 JUDGMENT DATED: 07/10/2025 undefined
7. Per Contra, learned Senior Standing Counsel Ms. Maithili Mehta was not in a position to dispute the fact that the opportunity of hearing through video conferencing was not granted to the present petitioner. On the basis of the affidavit-in-reply filed by the respondent, it was submitted by Ms. Mehta that the fact is not in dispute that opportunity of personal hearing through video-conferencing was not granted to the petitioner.
8. Having heard learned advocates for the respective parties and having perused the material on record, the limited question for consideration is with regard to procedure of service of notice under the Faceless Assessment provisions under Section 144B of the Act. The Government of India, Ministry of Finance has come up with Standard Operating Procedure (SOP) dated 03.08.2022 for faceless assessments. Clause G.3 relates to the Centralised Communication to Page 6 of 12 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:30:17 IST 2025 NEUTRAL CITATION C/SCA/11346/2023 JUDGMENT DATED: 07/10/2025 undefined improve compliance of notice under Section 142(1) of the Act.
9. On bare perusal of the Standard Operating Procedure, it can be interpreted that the respondent was required to give notice for Faceless Assessment. Further, the respondent was also required to give notice for video conferencing. It is not in dispute that the petitioner was not heard before passing of the Assessment Order. Therefore, it is fundamental proposition of law that other side should be heard before any order is passed. The maxim of Audi Alteram Partem is broad enough to include the rule against bias since a fair hearing is must for it to be unbiased hearing. The essential ingredients of fair hearing is that a person should be served with a proper notice and should be given a right to hearing.
10. Considering the fact and the documents on record it is noticed that though hearing through Page 7 of 12 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:30:17 IST 2025 NEUTRAL CITATION C/SCA/11346/2023 JUDGMENT DATED: 07/10/2025 undefined video conferencing was sought by the assessee, the same was not responded before passing the order of assessment under section 143(3) read with Sections 147 and 144B of the Act, which in our opinion is in breach of Section 144B(7)(vii) (2) of the Act, and violative of principles of natural justice.
Moreover, in the decision dated 16.04.2024 in the case of Panchmahal Steel Limited V/s. Additional/Joint/Deputy/ Assistant Commissioner of Income Tax/ Income Tax Officer reported in (2024) Taxman.com 326 (Gujarat)), Co-ordinate Bench of this Court has held as under: -
"6. We have heard learned advocate for the respective parties and have gone through the material produced on record and the orders passed by the authorities below.
7. Considering the submissions made by learned advocates for the respective parties and having gone through the material produced on record, the question that falls for consideration of Page 8 of 12 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:30:17 IST 2025 NEUTRAL CITATION C/SCA/11346/2023 JUDGMENT DATED: 07/10/2025 undefined this Court is whether the impugned order dated 28.3.2022 can be said to be legal and justified?
8. So as to decide the aforesaid question, in our considered opinion, the undisputed facts are required to be taken note of. It is the say of the petitioner that while passing the reassessment order, the effective opportunity of hearing was not given during the course of argument. Learned advocate Mr.Raval for the revenue could not dispute the said fact by filing any affidavit along with the concrete material and/or falsify the statement made by learned advocate for the petitioner. Meaning thereby, contention raised by the learned advocate for the petitioner that no effective opportunity of hearing was given, remained uncontroverted. Keeping in mind the aforesaid fact, the relevant provision of Section 144B deserves to be taken note of, which can be quoted as under :
"Section 144B(7) : For the purpose of faceless asssessment :
(i) xxx xxx xxx Page 9 of 12 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:30:17 IST 2025 NEUTRAL CITATION C/SCA/11346/2023 JUDGMENT DATED: 07/10/2025 undefined
(ii) xxx xxx xxx
(iii) xxx xxx xxx
(iv) xxx xxx xxx
(v) xxx xxx xxx
(vi) xxx xxx xxx
(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;"
9. On perusal of the aforesaid provision, it is the duty cast upon the authorities in faceless assessment, if there is a demand for personal hearing, the same deserve to be granted. Keeping Page 10 of 12 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:30:17 IST 2025 NEUTRAL CITATION C/SCA/11346/2023 JUDGMENT DATED: 07/10/2025 undefined in mind the mandatory provision, if the facts of the present case is considered, indisputably, the request made by the petitioner for personal hearing through video conferencing at that stage was acceded to, however, intimation thereof was sent after the time of hearing was scheduled. Admittedly, on the second time, the request of the petitioner for granting personal hearing through video conferencing, intimation thereof was to be given one day advance, was not either acceded to or taken care of by the revenue authorities and straightway, the impugned order was passed. Thus, in our considered opinion, while passing the impugned order, the provision of Section 144B of the Act was not complied with by the revenue authorities and thereby, the order passed cannot be sustained in eye of law. Without going further into merits of the case, it would be in the fitness of thing that the petition is allowed solely on the ground of violation of principle of natural justice, without adverting to anything on merits."
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NEUTRAL CITATION C/SCA/11346/2023 JUDGMENT DATED: 07/10/2025 undefined
11. In the instant case, despite the request being made by the petitioner for personal hearing through video conferencing, the same was not acceded to. In view of the same, impugned notice dated 29.7.2022 under Section 148 of the Act as well as the assessment order dated 19.5.2023 under Section 147 read with Section 144B of the Act for the Assessment Year 2017-18 are not tenable and hence are required to be quashed and set aside and are accordingly quashed and set aside and the matter is remanded back to the Faceless Assessment Authority to comply with the procedure as envisaged by SOP dated 03.08.2022 and pass a fresh order after following the due procedure of law. Rule is made absolute to the aforesaid extent with no orders as to costs.
(BHARGAV D. KARIA, J) (PRANAV TRIVEDI,J) SAJ GEORGE Page 12 of 12 Uploaded by SAJ GEORGE(HC01069) on Wed Oct 08 2025 Downloaded on : Thu Oct 09 00:30:17 IST 2025