The court emphasized the importance of granting the petitioner an opportunity of hearing as required by Section 144B(7) of the Income Tax Act, and held that the failure to do so violated the principles of natural justice and the mandatory procedure under the Faceless Assessment Scheme.

JUDGMENT

Manmohan, J. - The petition has been heard by way of video conferencing.

2. Present writ petition has been filed challenging the Assessment Order dated 24th May 2021 passed by the Respondent No.1 under section 143(3) read with section 144B for Assessment Year [AY] 2018-19, notice of demand issued under section 156 as well as notice for initiation of penalty proceeding under section 270A of the Act and all proceedings initiated pursuant thereto.

3. Learned senior counsel for the Petitioner states that the Respondent No.1 issued show cause notice requiring the Petitioner to show-cause by 23:59 hours on 25th April 2021 as to why assessment should not be completed as per draft assessment order. He further states that considering that the issues were numerous and factual, the Petitioner in response to the show-cause notice-cum-draft assessment order, made specific request for personal hearing under the specific tab/ column 'VC' in terms of Section 144B(7)(vii)-(ix) of the Act on the e-filing portal to make oral submissions providing necessary explanation and clarifications which was neither granted, nor rejected by Respondent No. 1.

4. He points out that the Respondent disposed of the detailed legal and factual objections submitted by the Petitioner in a mechanical manner and denied the request for personal hearing without specifying any reason, thereby resulting in blatant violation of the statutory provisions of Section 143(3) and 144B of the Income Tax Act, 1961 [the Act] and principles of natural justice.

5. Per contra, Mr. Puneet Rai, learned senior standing counsel for respondents submits that the expression used in clause (vii) of sub-Section (7) of Section 144B of the Act is 'may' and not 'shall' and, therefore, there is no vested right in the petitioner to claim a personal hearing.

6. Having heard learned counsel for the parties, this Court is of the view that Section 144B (7) provides for an opportunity of personal hearing, if requested, by the assessee. The relevant portions of Section 144B (7) and Section 144B (9) are reproduced hereinbelow:

"144B. Faceless assessment -

(1) xxxx xxxx xxxx xxxx

(7) For the purposes of faceless assessment-

xxxx xxxx xxxx xxxx

(vii) in a case where a variation is proposed in the draft assessment order or final draft assessment order or revised draft assessment order, and an opportunity is provided to the assessee by serving a notice calling upon him to show-cause as to why the assessment should not be completed as per the such draft or final draft or revised draft assessment order, the assessee or his authorised representative, as the case may be, may request for personal hearing so as to make his oral submissions or present his case before the income-tax authority in any unit;

(viii) the Chief Commissioner or the Director General, in charge of the Regional Faceless Assessment Centre, under which the concerned unit is set up, may approve the request for personal hearing referred to in clause (vii) if he is of the opinion that the request is covered by the circumstances referred to in sub-clause (h) of clause (xii);

xxxx xxxx xxxx xxxx

(xii) the Principal Chief Commissioner or the Principal Director General, in charge of the National Faceless Assessment Centre shall, with the prior approval of the Board, lay down the standards, procedures and processes for effective functioning of the National Faceless Assessment Centre, Regional Faceless Assessment Centres and the unit set up, in an automated and mechanised environment, including format, mode, procedure and processes in respect of the following, namely: -

xxxx xxxx xxxx xxxx

(h) circumstances in which personal hearing referred to clause

(viii) shall be approved;.....

xxxx xxxx xxxx xxxx

(9) Notwithstanding anything contained in any other provision of this Act, assessment made under sub-section (3) of section 143 or under section 144 in the cases referred to in subsection (2) [other than the cases transferred under sub-section (8)], on or after the