Dipesh Lalchand Shah V. The National Faceless Assessment Centre

SCA/14187/2021

AI Insights

The case involves Dipesh Lalchand Shah, the petitioner, who challenged an assessment order and demand notice issued by the National Faceless Assessment Centre for the assessment year 2018-19. The petitioner argued that the assessment was conducted in violation of natural justice as it did not provide an opportunity for a personal hearing, which is mandated under Section 144B(7)(vii) of the Income Tax Act, 1961. The petitioner had responded to a draft assessment order with detailed submissions and documents, which were allegedly not considered by the Assessing Officer in the final order. The court found that the principles of natural justice were not followed, leading to the quashing of the assessment order and remanding the case for a fresh assessment process.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 798241 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 01-08-2022
• Assessment Year: misc
• Other Referred Cases: Atulbhai Kantilal Mehta Vs. The Additional/Joint/Deputy/Assistant Commissioner of Income Tax/Income-Tax Officer, Agrawal JMC Joint Venture Vs. Assistant/Joint/Deputy/Assistant Commissioner of Income Tax/Income Tax Officer
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: NIKUNT RAVAL; KALPANA RAVAL
• Assessee Lawyers: TUSHAR HEMANI; VAIBHAVI PARIKH
• Keywords: Assessment Order; Demand notice; Faceless assessment; Natural Justice; Personal hearing
• Section: 143(3); 144B; 156

Judgement Text

"C/SCA/14187/2021 JUDGMENT DATED: 01/08/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 14187 of 2021 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE N.V.ANJARIA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? NO 2 To be referred to the Reporter or not ? NO 3 Whether their Lordships wish to see the fair copy of the judgment ? NO 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? NO ================================================================ DIPESH LALCHAND SHAH Versus THE NATIONAL FACELESS ASSESSMENT CENTRE ================================================================ Appearance: MR TUSHAR HEMANI, SENIOR ADVOCATE WITH MS VAIBHAVI K PARIKH(3238) for the Petitioner(s) No. 1 MR NIKUNT K RAVAL(5558) for the Respondent(s) No. 1 MRS KALPANAK RAVAL(1046) for the Respondent(s) No. 1 ================================================================ CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 01/08/2022 ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) Page 1 of 7 C/SCA/14187/2021 JUDGMENT DATED: 01/08/2022 Heard learned Senior Advocate Mr.Tushar Hemani assisted by learned advocate Ms.Vaibhavi K. Parikh for the petitioner and learned advocate Mr.Nikunt Raval appearing for learned advocate Ms.Kalpana K. Raval for the respondent. 2. Rule returnable forthwith. Learned advocate Mr.Nikunt Raval waives service of notice of Rule on behalf of the respondent. Having regard to the controversy arising in this petition in narrow compass, with the consent of the learned advocates appearing for the respective parties, the same is taken up for final disposal today itself. 3. By way of this petition, the petitioner has prayed for quashing and setting aside the assessment order dated 2nd June, 2021 passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) along with the demand notice issued under Section 156 of the Act for the assessment year 2018-19 on the ground of breach of principles of natural justice by not providing an opportunity of personal hearing as per the provisions of Section 144B(7)(vii) of the Act. 3.1 The petitioner filed its return of income for the assessment year 2018-19 on 4th Page 2 of 7 C/SCA/14187/2021 JUDGMENT DATED: 01/08/2022 October, 2018 declaring total income of Rs.3,36,05,290/-. The case of the petitioner was selected for scrutiny assessment under Section 143(3) of the Act. The Faceless Assessment was carried out as per the provisions of Section 144B of the Act and draft assessment order was prepared and forwarded to the petitioner along with the demand notice dated 16th April, 2021 determining the total income of Rs.6,15,47,910/- calling upon the petitioner to show cause as to why the assessment should not be completed as per the draft assessment order. The petitioner was given time up to 23.59 hours of 19th April, 2021 to submit the reply through the registered e- filing account. 3.2 The petitioner vide letter dated 19th April, 2021 furnished details along with 16 annexures in response to the show-cause notice dated 16th April, 2021. 3.3 The respondent Assessing Officer passed the impugned assessment order on 2nd June, 2021 without considering the reply of the petitioner by recording in paragraph 7.3 that the petitioner reiterated his earlier stand and no new documentary evidence was produced and overlooked the substantial new evidence produced by the petitioner. Page 3 of 7 C/SCA/14187/2021 JUDGMENT DATED: 01/08/2022 4. Learned Senior Advocate Mr.Tushar Hemani for the petitioner submitted that the impugned assessment order has been passed in gross violation of principles of natural justice by not considering detailed submissions as well as the documents filed with letter dated 19th April, 2021 by the petitioner. It was pointed out that the assessment for the year under consideration was getting time bared on 30th June, 2021 and therefore, the respondent Assessing Officer ought not to have passed the impugned order in undue haste by overlooking the submissions and the evidence filed by the petitioner in response to the show-cause notice. It was submitted that as per the provisions of Section 144B(7) the petitioner ought to have been given opportunity of personal hearing. 4.1 In support of his submissions, learned Senior Advocate Mr.Hemani relied upon the decision of this Court in case of Atulbhai Kantilal Mehta Vs. The Additional/Joint/Deputy/Assistant Commissioner of Income Tax/Income-Tax Officer rendered in Special Civil Application No.13158 of 2021. 4.2 Learned Senior Advocate Mr.Hemani also referred to and relied upon the decision of this Court in case of Agrawal JMC Joint Venture Vs. Assistant/Joint/Deputy/Assistant Commissioner of Page 4 of 7 C/SCA/14187/2021 JUDGMENT DATED: 01/08/2022 Income Tax/Income Tax Officer rendered in Special Civil Application No.7477 of 2021. 5. On the other hand, learned advocate Mr.Nikunt Raval for the respondent Assessing Officer submitted that the petitioner has an alternative efficacious remedy of preferring an appeal before the Commissioner of Income Tax (Appeals) challenging the impugned assessment order raising all the grounds which are raised in this petition. 5.2 It was submitted that the petitioner never prayed for personal hearing as provided under Section 144B(7)(xii) of the Act. 5.3 Learned advocate Mr.Raval submitted that the impugned assessment order is passed after taking into consideration the reply filed by the petitioner during the course of assessment proceedings and the reply dated 19th April, 2021 filed by the petitioner in response to the show- cause notice dated 16th April, 2021 is only reiteration of what was stated by the petitioner during the course of assessment proceedings. 6. Considering the rival submissions made by the respective parties and on perusal of the impugned assessment order, it appears that the respondent Assessing Officer has not considered the reply Page 5 of 7 C/SCA/14187/2021 JUDGMENT DATED: 01/08/2022 dated 19th April, 2021 filed by the petitioner in response to the show-cause notice dated 16th April, 2021 issued along with Draft Assessment order, while passing the impugned assessment order. The petitioner submitted 16 documents along with the reply dated 19th April, 2021, however, in paragraph 7.3 of the impugned assessment order it is stated by the Assessing Officer that the petitioner reiterated his earlier stand and no new documentary evidence or logic has been put forth and the documents submitted were already considered while framing the draft assessment order. 7. This fact is contrary to the record as it appears from the reply dated 19th April, 2021 which contained 16 annexures furnished by the petitioner, which were not supplied earlier. Moreover, the petitioner has not been granted any opportunity of hearing as provided under Section 144B of the Act. Thus, there is gross violation of principles of natural justice while passing the impugned assessment order contrary to the procedure prescribed under Section 144B of the Act, as held by this Court in case of Atulbhai Kantilal Mehta (Supra) as well as in case of Agrawal JMC Joint Venture (Supra). 8. In the result, this petition succeeds and is accordingly allowed. The impugned assessment Page 6 of 7 C/SCA/14187/2021 JUDGMENT DATED: 01/08/2022 order dated 2nd June, 2021 and the demand notice under Section 156 of the Act are hereby quashed and set aside and the matter is remanded back to the Assessing Officer. The Assessing Officer shall issue fresh show-cause notice along with the draft assessment order by granting an opportunity of personal hearing to the petitioner as per the provisions of Section 144B of the Act. Such exercise shall be completed within 12 weeks from the date of receipt of copy of this order. 9. It is made clear that we have not gone into the merits of the case as the impugned assessment order is quashed and set aside as the same is passed in violation of principles of natural justice. 10. Rule is made absolute to the aforesaid extent. No order as to costs. (N.V.ANJARIA, J) (BHARGAV D. KARIA, J) Dolly Page 7 of 7 "