Maheshkumar Bhagvandas Patel vs Income Tax Officer, Ward 3, ...
2023 Latest Caselaw 4390 Guj

     C/SCA/7656/2022                                     JUDGMENT DATED: 13/06/2023




             IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
               R/SPECIAL CIVIL APPLICATION NO. 7656 of 2022

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR. JUSTICE VIPUL M. PANCHOLI                           Sd./-
and

HONOURABLE MR. JUSTICE DEVAN M. DESAI                              Sd./-
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1     Whether Reporters of Local Papers may be allowed                        NO
      to see the judgment ?

2     To be referred to the Reporter or not ?                                 NO

3     Whether their Lordships wish to see the fair copy                       NO
      of the judgment ?

4     Whether this case involves a substantial question                       NO
      of law as to the interpretation of the Constitution
      of India or any order made thereunder ?

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                         MAHESHKUMAR BHAGVANDAS PATEL
                                     Versus
                       INCOME TAX OFFICER, WARD 3, NAVSARI
==========================================================
Appearance:
MR B S SOPARKAR(6851) for the Petitioner(s) No. 1
MR KARAN SANGANI, MRS KALPANA K RAVAL(1046) for the
Respondent(s) No. 1
SERVED BY RPAD (N) for the Respondent(s) No. 2
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CORAM:      HONOURABLE MR. JUSTICE VIPUL M. PANCHOLI
                                   and
             HONOURABLE MR. JUSTICE DEVAN M. DESAI
                       Date : 13/06/2023
                      ORAL JUDGMENT

(PER : HONOURABLE MR. JUSTICE VIPUL M. PANCHOLI)

1. Since, the issue involved in this matter runs in a very narrow compass, at the joint request made by the learned Advocates for the parties, the same was taken-up for final hearing and disposal, at the

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admission stage.

1.1 Rule. Learned Advocate, Mr. Sangani, appearing for learned Advocate, Ms. Raval, waives service of Rule for the Respondents.

2. By way of the present petition, filed under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs;

"7. ...

(a) quash and set aside the impugned order dated 29.03.2022 at Annexure- 'A' to this petition;

(b) quash and set aside the impugned notice of demand dated 29.03.2022 at Annexure- 'I' to this petition;

(c) quash and set aside the impugned penalty notice dated 29.03.2022 at Annexure- 'J' to this petition;

(d) pending admission, hearing and final disposal of this petition, to stay implementation and operation of the Assessment Order, notice of demand and notice of penalty at Annexure 'A', 'I' and 'J', respectively;

(e) any other and further relief deemed just and proper be granted in the interest of justice;

(f) to provide for the costs of this petition. "

3. Heard, learned Advocate, Mr. B.S. Soparkar, for the petitioner and learned Advocate, Mr. Karan Sangani, for learned Advocate, Ms. Raval, for the

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Respondents.

3.1 At the outset, learned Advocate, Mr. Soparkar, submitted that he does not press this petition qua the reliefs prayed for in Paragraph-7(c) of this petition.

3.2 Accordingly, this petition is considered qua the reliefs prayed for in Paragraph-7 (a), (b), (d), (e) and (f) only.

4. The brief facts of the case, leading to the filing of the present petition are as under,

It is the case of the petitioner that for the Assessment Year 2017-2018, a notice was issued to him by the Respondents, under Section 142(1) of the Income Tax Act, 1961 (referred to as 'the Act', hereinafter), on 20.12.2017, whereby, he was asked to file return of income.

4.1 Later on, a notice came to be issued to the petitioner on 04.06.2019 to show-cause, as to why the amount of Rs.1,01,95,810/- should not be added to the total income of the petitioner.

4.2 The petitioner submitted his reply to the same on 17.06.2019 and thereafter, another show-cause notice came to be issued to the petitioner on 02.09.2019 and the petitioner replied to the same on

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07.09.2019.

4.3 It is also the case of the petitioner that thereafter, a notice under Section 142(1) of the Act came to be issued to him on 12.10.2019 and the assessment order, under Section 144 of the Act, came to be passed on 30.11.2019, assessing the total income of the petitioner at Rs.1,76,43,300/-. However, it appears that due to some error no tax was determined and the rectification order, under Section 154 of the Act, came to be passed, determining the tax demand at Rs.2,18,07,089/-.

4.4 The petitioner has also stated that the notice, under Section 148 of the Act, also came to be issued to him on 31.03.2021, re-opening the re-assessment proceedings for the Assessment Year 2017-2018 and thereafter, notices were issued on different dates, as stated in the memo of the petition.

4.5 The petitioner filed return of income on 23.02.2022 and also gave a detailed replies on 16.03.2022, 17.03.2022 and 26.03.2022.

4.5.1 It is the specific case of the petitioner that in the aforesaid replies, he had specifically requested for an opportunity of personal hearing, considering the factual aspects of the case.

4.5.2 It is also stated that the petitioner had

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also made a request for granting an opportunity of hearing through video conference on the web portal of the Income Tax Department. However, Respondent No.2, without affording an opportunity of personal hearing, passed the impugned order dated 29.03.2022.

4.5.3 Pursuant to the above, the Respondents also issued a notice under Section 156 of the Act, determining the amount of tax at Rs.5,16,07,487/- as well as penalty notice under Section 274, read with Section 271 F, of the Act.

Hence, the present petition.

5. Learned Advocate, Mr. Soparkar, appearing for the petitioner mainly contended that the impugned order passed by the Respondent dated 23.09.2022, a copy of which is produced on record at Page-9 of the compilation, requires to be quashed and set aside only on the ground that Respondent No.2 has failed to give an opportunity of personal hearing through video conference, though, specifically requested for by the petitioner.

5.1 It was submitted that in the reply dated 26.03.2022, a copy of which is produced at Page-132 of the compilation, the petitioner has specifically asked for an opportunity of personal hearing through video conference, which is not accepted.

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5.2 Learned Advocate, Mr. Soparkar, then, referred to the documents produced at Page-136 of the compilation and pointed out that, though, the petitioner had made a specific request for grant of an opportunity of personal hearing through video conference on the web portal of the Respondent, they failed to afford such an opportunity to the petitioner and therefore, only on that count, the impugned order of assessment as well as the demand notice are required to be quashed and set aside.

5.3 Learned Advocate, Mr. Soparkar, also placed reliance on the provisions contained in Section 144 B(6)(viii) of the Act.

5.4 In support of his submissions, learned Advocate, Mr. Soparkar, also placed reliance on the decision of this Court in the case of 'AGRAWAL JMC JOINT VENTURE VS. ASSISTANT/ JOINT/ DEPUTY/ ASSISTANT COMMISSIONER OF INCOME TAX / INCOME TAX OFFICER', rendered in Special Civil Application No. 7477 of 2021, Dated: 11.10.2021, and submitted that the issue involved in this matter is squarely covered by the aforesaid decision and therefore, this petition be allowed.

6. On the other hand, learned Advocate, Mr. Sangani, appearing for learned Advocate, Ms. Raval, appearing for the Respondents referred to the averments made in the affidavit-in-reply filed on behalf of the Respondents.

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6.1 Learned Advocate, Mr. Sangani, however, fairly submitted that he is not in a position to dispute that the petitioner was not granted the opportunity of personal hearing, though, specifically requested for by him.

7. Having heard the learned Advocates for the parties and having perused the material on record, it emerges that by way of the show-cause notice dated 25.03.2022, the petitioner was asked to show-cause, as to why, the proposed variations should not be made, as mentioned in the said notice. Further, in the said notice, itself, it is stated that, if required, after filing the reply, the petitioner may make a request for personal hearing, so as to make oral submissions or to present his case. It is also clearly stated in the said notice that such a request can only be made by clicking the Seek Video Conferencing button available against the SCN in the view notices of this proceeding in the e-proceedings tab on e-filing portal.

7.1 It, further, transpires from the record that the petitioner submitted his reply on 26.03.2022, a copy of which is produced at Page-132 of the compilation. In the last paragraph of the reply dated 26.03.2022, the petitioner specifically made a request for an opportunity of personal hearing through video conferencing. Similar request was also made on web

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port of the Respondents also, as mentioned in the show-cause notice dated 25.03.2022 and in that regard, we have perused the documents produced at Page-136 of the compilation.

7.2 In this petition, it is the case of the petitioner that, though, he had made a specific request to provide an opportunity of personal hearing through video conference, the Respondents did not afford the same to the petitioner.

7.3 At this stage, it would be relevant to refer to the provisions contained in Section 144B (7), prior to Finance Act, 2022, which reads as under;

"(7) (a) The Principal Chief Commissioner or the Principal Director General, as the case may be, in- charge of the National Faceless Assessment Centre shall, in accordance with the procedure laid down by the Board in this regard, if he considers appropriate that the provisions of sub-section (2A) of section 142 may be invoked in the case,--

(i) forward the reference received from an assessment unit under clause (xxxii) of sub-section (1) to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner having jurisdiction over such case, and inform the assessment unit accordingly;

(ii) transfer the case to the Assessing Officer having jurisdiction over such case in accordance with sub- section (8);

(b) where a reference has been received by the Principal Chief Commissioner or Chief Commissioner or Principal

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Commissioner or Commissioner under sub-clause (i) of clause (a), he shall direct the Assessing Officer, having jurisdiction over the case, to invoke the provisions of sub-section (2A) of section 142;

(c) where a reference has not been forwarded to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, having jurisdiction over the case, in a case referred to in sub- clause (i) of clause (a), the assessment unit shall proceed to complete the assessment in accordance with the procedure laid down in this section." 7.4 Further, Section 144B (6)(viii) provides as under;

"144B ...

(viii) where the request for personal hearing has been received, the income-tax authority of relevant unit shall allow such hearing, through National Faceless Assessment Centre, which shall be conducted exclusively through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony, to the extent technologically feasible, in accordance with the procedure laid down by the Board;"

7.5 In view of the above discussion, it would be relevant to refer to the observations made by the Division Bench of this Court in AGRAWAL JMC JOINT VENTURE' (Supra), which reads thus;

"18. In summation, it can be deduced from the provisions, as also the decisions discussed that Section 144B of the IT Act under heading of the Faceless Assessment provides for the assessment under Section 143 (3) and 144 to be carried out as per the procedure contained in

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Section 144 B of the IT Act. As noted above, Sub-section (9) of Section 144B of the IT Act in no uncertain term provides that after the 1st day of April, 2021, the assessment made under Section 143 (3) or under Section 144(4) of the IT Act shall be non est, when not made in accordance with the procedure detailed in Section 144B of the IT Act. The opportunity of hearing as envisaged under Section 144B of the IT Act also shall need to be scrupulously adhered to as the principles of natural justice are unfailingly ingrained in this provision.

19. Reverting to the facts on the matter on hands, it is quite clear that the notice along with the draft assessment order was given to the petitioner on 04.04.2021, the response to the same was given within two days by the petitioner in the mode as prescribed under the Law. It also filed further reply to the said notice on 08.04.2021 as well as on 15.04.2021 in continuation of the first reply of 06.04.2021. It is also a matter of record that there is no reference of the request made on 07.04.2021 in a subsequent reply made in continuity on the part of the petitioner of 08.04.2021 as well as 15.04.2021. However, that would not in any manner question his conduct of requesting for the personal hearing in as much as that aspect is neither disputed nor belied from the material which is available from the eportal of the Income Tax Department. In fact in the affidavit-in-reply itself there is a reference of such a request made by the petitioner which according to the respondent-revenue is impermissible as he has not exercised the option while responding to the notice and the draft assessment order on 06.04.2021.

XXX XXX XXX 20.1 Para-11 of E Assessment Scheme, 2019 notified on 12.09.2019 as modified on 13.08.2020 provides that no personal appearance in the Centre or unit would be there but request for personal hearing can be made by the assessee or his authorised representative in Faceless

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Assessment Scheme.

XXX XXX XXX

22. Having noticed that it was a time when this regime of faceless assessment had merely begun and there were many hiccups in absence of the revenue having shown that the link was created at the relevant point of time and in absence of any material on that issue, when it recognises the fact that it had received the request of 07.04.2021, there was no earthly reason for it to have ignored it and not to avail the hearing.

23. The subsequent Guidelines for personal hearing through the video conferencing recommending dos and don'ts cannot be taken into consideration by this Court for the simple reason that the authority which issued and the date from which they have come into practice is missing. Moreover, it is not even known whether this is for the internal circulation as in the public domain these Guidelines have not come, therefore, what presently would guide the case of the petitioner is the FAQs available for seeking the video conferencing and seeking the adjournment of the video conferencing, we hold that there has been a violation when the modified assessment order was to be passed by making an addition of nearly 107 Crore and when a specific request had gone on the 3rd day of issuance of notice from the petitioner and when the time for framing the assessment was not getting barred, non-availment of the opportunity of the personal hearing surely has resulted into the violation of the principle of natural justice and therefore, the indulgence would be necessary."

7.5 From a bare perusal of the provisions of the Act as well as the observations made by the Division Bench of this Court, as recorded herein above, it is

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clear that when the petitioner had made a specific request to afford an opportunity of personal hearing through video conference, the Respondents were required to grant the same to the petitioner. However, in the case on hand, admittedly, no such opportunity was granted to the petitioner and thereby, the Respondents have committed the breach of the principles of natural justice. This petition deserves to be allowed.

8. In the result, this petition is PARTLY ALLOWED and the impugned order dated 29.03.2022 as well as the demand notice dated 29.03.2022 are, hereby, quashed and set aside and the matter is remanded to the Assessing Officer concerned, who shall grant an opportunity of personal hearing to the petitioner and thereafter, shall pass a fresh, reasoned order, in accordance with law. Rule is made absolute to the above extent.

Sd./-

(VIPUL M. PANCHOLI, J)

Sd./-

(D. M. DESAI,J) UMESH/-