SMT PARMJIT KAUR, FARIDKOT V. INCOME TAX OFFICER WARD-2, FARIDKOT

ITA 130/ASR/2022

AI Insights

The case involves Smt. Parmjit Kaur, who appealed against the order of the CIT(A), National Faceless Appeal Centre, Delhi, concerning the Assessment Year 2017-18. The primary contention was that the assessment order was passed arbitrarily, without following the principles of natural justice, and in gross violation of the scheme of faceless assessment under section 144B of the Income Tax Act. The assessee argued that no notice under section 142(1) was served, rendering the proceedings void ab initio. The Tribunal found merit in the assessee's arguments, noting the absence of a show cause notice and the lack of a personal hearing, which are essential under the faceless assessment scheme.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 114536 (ITAT-AMRITSAR)
• Duration Of Justice: 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-11-2022
• Assessment Year: misc
• Appeal Filed On: 14-10-2022
• Other Referred Cases: Piramal Enterprises Ltd. v. Addl./Joint/Dy./Asstt.CIT/ITO, Rani Promoter (P.) Ltd. v. Addl. CIT, Toplight Corporate Management (P.) Ltd. v. National Faceless Assessment Centre Delhi, Bharat Aluminium Company Ltd. Vs. Union of India
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: G. K. GARG
• Keywords: Opportunity of being heard; Principle of natural justice; Set aside
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 130/Asr/2022 Assessment Year: 2017-18 Smt. Parmjit Kaur W/o Balwinder Singh New Cantt Road, B XIII NCR 84C, Faridkot 151203, Punjab [PAN: BVNPK 3681A] Vs. Income Tax Officer, Ward-2, Faridkot (Appellant) (Respondent) Appellant by : Sh. G. K. Garg, Adv. Respondent by : Sh. Rajiv Wadhera, Sr. DR Date of Hearing: 10.11.2022 Date of Pronouncement: 17.11.2022 ORDER Per Dr. M. L. Meena, AM: The present appeal has been filed by the assessee challenging the order dated 13.07.2021 passed by the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi in respect of Assessment Year 2017-18. ITA No. 130 /Asr/2022 Parmjit Kaur v. ITO 2 2. At the outset, the Ld. Counsel for the assessee has stated that the impugned orders have been passed arbitrarily, without following the principles of natural justice and in gross violation of the scheme of faceless assessment under section 144B of the Act, inasmuch in absence of Notice u/s 142(1) served to the assessee, the whole proceeding are void-ab-initio, hence liable to set aside. He contended that the ld. CIT(Appeals)/NFAC has misdirected himself by dismissing the appeal without giving the proper opportunity of being heard or without going through the facts of the case, cause of case selection under ‘Operation Clean Money’, submission in support of Appeal, Bank Accounts statement presented or without seeking any clarification or verification on submission filed in support of appeal or without giving any opportunity of personal hearing or PH by Video Conference is not justified and not sustainable. He pleaded that the matter may be remanded back to the CIT(A) to adjudicate afresh as per law after considering the submission of the appellant assesse and according adequate opportunity of being heard. 3. The Ld. DR although supported the impugned order, however, he has no objection to the request of the assesse. ITA No. 130 /Asr/2022 Parmjit Kaur v. ITO 3 4. Heard rival contentions, perused the material on record, impugned order, written submissions and case law cited before us. 5. The Ld. AR petitioner has challenged the assessment order passed under section 143(3) exparte qua the assesse, on grounds that impugned order was passed without following the principles of natural justice and in gross violation of the scheme of faceless assessment. In our view, a quasi - judicial body must normally grant a personal hearing as no assessee or litigant should get a feeling that he never got an opportunity or was deprived of an opportunity to clarify the doubts of the Assessing Officer. Consequently, the word "may" in section 144B(viii) should be read as "must" or "shall" and requirement of giving an assessee a reasonable opportunity of personal hearing is mandatory. Consequently, an assessee has a vested right to personal hearing and the same has to be given, if an assessee asks for it. The right to personal hearing cannot depend upon the facts of each case. 6. The mandate provides that the Section 144B(1)(xvi) provides an opportunity to the assessee by serving a Show Cause Notice in case any variation of assessment is proposed which is prejudicial to the interest of assessee, and that Section 144B(1)(xxv) provides for issuance of draft ITA No. 130 /Asr/2022 Parmjit Kaur v. ITO 4 assessment order to the assessee after considering the reply to Show Cause Notice. In the present case, it is undisputed fact on record that the AO has not issued the draft assessment order proposing variations for which no Show Cause Notice was ever issued to the appellant assesse. 7. In case of ‘Piramal Enterprises Ltd. v. Addl./Joint/Dy./Asstt.CIT/ITO’, [2021] 129 taxmann.com 18/282 Taxman 407, while interpreting Section 144B of the Act, the Bombay High Court has held as under:— "65. Principles of natural justice firmly run through fabric of section 144B(1) of the Income-tax Act, 1961. Whenever DAO, FDAO is prejudicial to the interest of assessee or RDAO is prejudicial to the interest of assessee in comparison to DAO or FDAO, upon a response to show-cause notice, personal hearing for oral submissions or to present its case before income tax authority is strongly entwined in the provisions on a request from an assessee unless it is absurd, strategised and/or intended to protract assessment etc. It would also emerge from various decisions, referred to above, ordinarily, such a request would not be declined. Judgments cited on behalf of petitioner referred to hereinbefore give exposition on significance and importance of principles of natural justice. 66. Section 144-B of the Income-tax Act, 1961 captioned 'Faceless Assessment' commences vide its sub-section (1) with a non obstante clause and compulsively requires assessment u/ss. 143(3) and 144 shall be by prescribed procedure contained in sub-section (1) of section 144B in the cases referred to in sub-section (2) thereof. 67. Sub-section (9) of section 144B declares that assessment made under section 143(3) or under section 144(4) referable to sub-section (2) other than sub-section (8) on or after 1st day of April, 2021 shall be non est if such assessment is not made in accordance with the procedure laid down under section 144B. There is a telling/pronounced rigour, to follow the procedure under section 144B, lest the assessment would be non est. 68. Going by the provisions under section 144B, when hearing has been envisioned and incorporated, it is imperative to observe principles of natural justice as stipulated. ** ** ** 70. In the circumstances, when an assessee approaches with response to show cause ITA No. 130 /Asr/2022 Parmjit Kaur v. ITO 5 notice, the request made by an assessee, as referred to in clause (vii) of sub-section (7) of section 144B, would have to be taken into account and it would not be proper, looking at the prescribed procedure with strong undercurrent to have hearing on a request after notice, to say that petitioner would have opportunity pursuant to section 144C in the present matter, would intercept operation of the scheme contained under section 144B. 8. The various Court in multiple cases, including Rani Promoter (P.) Ltd. v. Addl. CIT [2021] 129 taxmann.com 359/282 Taxman 120 and Toplight Corporate Management (P.) Ltd. v. National Faceless Assessment Centre Delhi [2021] 128 taxmann.com 221/281 Taxman 451 (Delhi), has unequivocally held that issuance of Show Cause Notice, mentioning the proposed additions under section 144B(xvi), is a mandatory requirement and any assessment order passed without issuance of such Show Cause Notice is bad in law. In our view, in the instant case, the Show Cause Notice, referred to in the final Assessment Order, was never served upon the appellant asseessee rendered the assessment bad in law. 9. On identical facts the Hon’ble Delhi High Court in the case of ‘Bharat Aluminium Company Ltd. Vs. Union of India* [2022] 134 taxmann.com 187 dated 14/01/2022 held that an assessee has a vested right to personal hearing and the same has to be given, if an assessee asks for it. The right to personal hearing cannot depend upon the facts of each case. ITA No. 130 /Asr/2022 Parmjit Kaur v. ITO 6 10. In the above view, we accept the grievance of the assesse as genuine and consequently, the impugned order of the CIT(A) is set aside and the matter is remanded back to the AO to pass de novo assessment order as per law prescribed u/s 144B of the Act after granting proper opportunity of being heard to the assesse. We make it clear that personal hearing could not be limited to cases involving disputed questions of fact but would also include cases involving issues of law, thus, assessee would have a vested right to personal hearing in instant faceless assessment proceeding. 11. In the result, the appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on 17.11.2022 Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr/PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T True Copy By Order