S.144B(6) Income Tax Act | If Assessee “Requests” Then Opportunity Of Personal Hearing Is Mandatory, Not Optional: Allahabad High Court

The Allahabad High Court has held that opportunity of personal hearing is mandatory under Section 144B(6)(vii) and (viii) of the Income Tax Act, 1961 when show cause notice is issued regarding why assessment may not be completed as proposed. The Court held that once the assesee “requests” for an opportunity of personal hearing, it becomes incumbent on the Assessing Authority to grant that opportunity under Section 144B(6)(viii).

Section 144B provides for Faceless Assessment. Section 144B(6)(vii) provides that in case of assessment proceedings, the assesee or his authorized representative may request for personal hearing so as to make his oral submissions or present his case before the income-tax authority. Section 144B(6)(viii) provides that were “request” of personal hearing has been received by the authority, such opportunity must be granted through National Faceless Assessment Centre in the manner prescribed.

The bench comprising of Justice Saumitra Dayal Singh and Justice Donadi Ramesh held that

“the word "request" used under Section 144B(6) (vii) and (viii) only imply, where an assessee may furnish his written reply to the show-cause notice but not opt to avail opportunity of personal hearing, it may not be mandatory for the Assessing Officer to grant such opportunity of personal hearing if he intends to accept the explanation furnished. He may pass appropriate ex parte order accepting the explanation furnished by the assessee.”

The Court held that based on the reply furnished, if the Assessing Officer forms a tentative opinion to pass an adverse assessment order, then he must necessarily fix a date of personal hearing and communicate the same to the assesee in accordance with the provisions of the Act. Only if the assesee fails to avail opportunity so provided, the Assessing Officer can proceed in accordance with law.

The Court held that for an effective discussion and reasoned conclusion it is necessary that assesee must be afforded an opportunity of personal hearing as merely submitting a reply may not be sufficient.

Case Background

Petitioner was received a notice on 11.03.2024 to appear on 15.03.2024. Since petitioner was unable to appear on the short date fixed, petitioner filed for an adjournment on 16.03.2024. on the adjournment application, the Assessing Officer fixed the next date as 17.03.2024, i.e. the next day. Since it was a Sunday, petitioner could not appear and assessment order under Section 143(3) read with Section 144B of the Income Tax Act was passed on 23.03.2024.

Petitioner challenged the assessment order on grounds of violation of principles of natural justice. Though an objection was raised against the maintainability of the writ petition, the Court held that the petitioner had sufficiently shown the cause for the petition to be maintainable.

High Court Verdict

The Court held that it was not optional for the Assessing Officer to grant an opportunity of hearing under Section 144B(6)(vii) and (viii), but it was mandatory under the scheme of the Act.

The Court observed that the written replies can often be interpreted in more than one ways. Since assessment proceedings involve both questions of facts and laws, the Court held that mere written explanations may not be enough in such cases.

“It is not uncommon that in the course of a judicial or quasi judicial proceeding the written document may be read in more than one way. That is also true of all explanations and replies. Also, language and writing are a mode of communication. They vary from person to person. Often same or similar thoughts are expressed differently by different persons depending upon their own skill and preferred use of expressions and method of writing. Therefore, what may be intended to be communicated by an assessee by submitting his written reply, may be received differently by the Assessing Officer on a simple ex parte reading of the same.”

Observing that the next date fixed by the Assessing Officer was a Sunday, the Court held that the Assessing Officer was obligated to fix a date before passing the assessment order. The Court held that there was violation of principles of natural justice and accordingly, the assessment order was set aside.

The Court held that if the Assessing Officer was accepting the reply furnished by the petitioner, then assessment order may be passed without opportunity of personal hearing. However, the Court directed the Assessing Officer to mandatorily give opportunity of personal hearing if the reply was being rejected.

Accordingly, the writ petition was allowed.

Case Title: Satish Kumar Bansal Huf v. National Faceless Assessment Centre Nafac And Another [WRIT TAX No. - 627 of 2024]

Counsel for Petitioner: Shubham Agrawal

Counsel for Respondent: Manu Ghildyal

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