APPLEWOODS ESTATE PRIVATE LIMITED V. ADDITIONAL/ JOINT/ DEPUTY/ ASSISTANT COMMISSIONER OF INCOME TAX/ INCOME TAX OFFICER

SCA/20755/2022

AI Insights

The case involves Applewoods Estate Private Limited, which challenged an income tax assessment order for the assessment year 2020-2021. The company had filed its return declaring an income significantly lower than what was assessed by the Income Tax Officer. The primary contention was the refusal of the tax authority to provide a personal hearing via video conference, despite multiple requests from the assessee, which the assessee argued was necessary due to the complexity of the facts involved. The court found that the refusal to provide a personal hearing violated the principles of natural justice, leading to the quashing of the assessment order and related notices.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 746511 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 22-12-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: VARUN PATEL; DEV PATEL
• Assessee Lawyers: B S SOPARKAR
• Keywords: Assessment; Income Tax; Natural Justice; Personal hearing; Video Conference
• Section: 143(3); 142(1); 274; 144B; 271AAC(1); 156

Judgement Text

"C/SCA/20755/2022 ORDER DATED: 22/12/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 20755 of 2022 ========================================================== APPLEWOODS ESTATE PRIVATE LIMITED Versus ADDITIONAL/ JOINT/ DEPUTY/ ASSISTANT COMMISSIONER OF INCOME TAX/ INCOME TAX OFFICER ========================================================== Appearance: MR B S SOPARKAR(6851) for the Petitioner(s) No. 1 MR.VARUN K.PATEL and DEV PATEL (3802) for the Respondent(s) No. 2 SERVED BY RPAD (N) for the Respondent(s) No. 1 ========================================================== CORAM:HONOURABLE MS. JUSTICE SONIA GOKANI and HONOURABLE MRS. JUSTICE MAUNA M. BHATT Date : 22/12/2022 ORAL ORDER (PER : HONOURABLE MRS. JUSTICE MAUNA M. BHATT) 1. Rule. Mr. Varun Patel, learned advocate waives service of notice of rule on behalf of respondent No.2. 2. This petition is filed challenging the order dated 21.9.2022, under Section 143(3) read with Section 144B of the Income Tax Act, 1961 (“The Act” for short), passed by respondent No.1, for assessment Year 2020-2021. In the order dated 21.9.2022, the total income of the assessee has been assessed at Rs.290,21,61,734/-. 3. The assessee is a private limited company engaged in Page 1 of 7 C/SCA/20755/2022 ORDER DATED: 22/12/2022 business of development of real estate projects. The assessee filed its return of income for A.Y.2020-2021 on 13.2.2021, declaring income at Rs.218,99,04,610/-. The said return was selected for scrutiny and notices under Section 143(3) and 142(1) were issued. The last notice issued was on 25.8.2022 to which the assessee responded on 2.9.2022. It is the case of the assessee that with reply to the show cause dated 21.3.2022, it sought for personal hearing. Once again, with the reply dated 25.8.2022, video conference (V C) hearing was sought on 2.9.2922, through web portal. The screen shot placed on record, supports the case of assessee that in response dated 2.9.2022, the assessee sought for personal hearing with the reason that matter requires explanation due to complexity of facts. Thereafter, one more opportunity of personal hearing was sought vide communication dated 21.9.2022 seeking personal hearing. However, to the shock and surprise of the assessee, without acceding to the request of V C hearing, the order under Section 143(3) read with Section 144B of the Act was passed on 21.9.2022 for A.Y.2020-2021. The demand notice under Section 156 dated 20.9.2022 has been issued and the penalty notice under Section 274 read with 271AAC(1) dated 21.9.2022 was also served to the assessee. Aggrieved by the action of the respondents not acceding to the request of providing an opportunity of personal hearing before passing an order dated 21.9.2022, present petition is filed. Page 2 of 7 C/SCA/20755/2022 ORDER DATED: 22/12/2022 4. Heard Mr. B.S.Soparkar, learned advocate for the petitioner and Mr. Varun Patel with Mr. Dev Patel, learned advocates for the respondents. 5. Mr. B.S.Soparkar, learned advocate for the petitioner submitted that once the personal hearing was sought by the assessee, it was incumbent upon respondent No.1 to provide opportunity of personal hearing through video conference. As the request of the assessee has not been acceded to, the framing of assessment is dehors the principles of natural justice and contrary to the provisions of the Act. He further submitted that the procedure under Section 144B(6) contemplates that the assessee should be provided opportunity of personal hearing so as to make his oral submission or present his case before the income tax authority of the relevant unit. Also, where the request of personal hearing has been received, the income tax authority of relevant unit shall allow such hearing through National Faceless Assessment Centre. In the present case, despite personal hearing was sought, the same was not allowed before framing assessment and, therefore, the order passed under Section 143(3) with Section 144B is dehors the provisions of law. 6. On the other hand, Mr. Varun Patel, learned senior standing counsel for the respondents relying upon the affidavit Page 3 of 7 C/SCA/20755/2022 ORDER DATED: 22/12/2022 submitted that against the order under Section 143(3) with 144B for A.Y.2020-2021 dated 21.9.2022, the assessee has alternative remedy of appeal and, therefore, the petition may not be entertained. He further submitted that before scrutiny assessment various notices under Section 143(3) and 142(1) were issued, to which the assessee filed detailed replies. The replies in detail filed were duly considered before passing the assessment order dated 21.9.2022. Thus, the due procedure contemplated under the provisions of the Act has been followed and there being no illegality, no interference is called for at this stage. 7. Having heard learned advocates for the respective parties, it is noticed that in the show-cause notice dated 25.8.2022 for A.Y.2020-2021 certain details were called for from the assessee. The very same notice reads as under: “You are hereby given an opportunity to show cause why proposed variation should not be made and the assessment should not be completed accordingly. Kindly submit your response through your registered e-filing account at www.incometax.gov.in by 11:00 hours of 02/09/2022, whereby you may either: - Page 4 of 7 C/SCA/20755/2022 ORDER DATED: 22/12/2022 a. accept the proposed variation; or b. file your written reply objecting to the proposed variation; or c. If required, in addition to filing written reply you may request for personal hearing so as to make oral submissions or present your case. The 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 efiling portal. The request can be made only before expiry of compliance date & time through video conference. In case no response is received by the given time and date, the assessment shall be finalized taking into account the variation(2) stated above.” 8. In response to the notice dated 25.8.2022, the assessee filed its detailed reply on 2.9.2022 and also made a request of video conference hearing with reason that the matter requires explanation due to complexity of the facts. The screen shot of web portal indicates the video conference hearing sought for by the assessee. However, the record shows that the same was not acceded to, by the respondent and no opportunity of Page 5 of 7 C/SCA/20755/2022 ORDER DATED: 22/12/2022 video conference hearing was provided to the assessee. The reply affidavit dated 22.12.2022 does not dispute the above factual aspect. 9. In view of above facts, the order of assessment under section 143(3) read with 144B dated 21.9.2022 deserves to be quashed and set aside and hereby quashed and set aside. The demand notice under Section 156 dated 20.9.2022 and penalty notice under Section 274 read with Section 271AAC(1) is also quashed and set aside. 10. The assessment proceedings are restored to the file of the authority from the stage of providing personal hearing to the assessee as sought for. Once the personal hearing has been given to the assessee, the assessee is expected to cooperate and assessing officer is at liberty to pass an order in accordance with law as expeditiously as possible but not later than ten weeks from the date of receipt of the order. 11. We make it clear that we have allowed the petition and quashed the order of assessment and penalty as mentioned above, only on the ground of breach of principles of natural justice, without going into the merits of the matter of the either side. Page 6 of 7 C/SCA/20755/2022 ORDER DATED: 22/12/2022 12. The petition is therefore allowed to the above extent. Rule made absolute. No costs. (SONIA GOKANI, J) (MAUNA M. BHATT,J) NAIR SMITA V. Page 7 of 7 "