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IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Shakdher, Girish Kathpalia, JJ.
Gurupreet Sangla [w. P. (c) 6061/2023]
Seema Sangla [w. P. (c) 6062/2023] – Appellant
Versus
Principal Commissioner of Income Tax, & Anr. – Respondents
W.P.(C) 6061 of 2023 & W.P.(C) 6062 of 2023
Decided On : 11-07-2023
Personal Hearing - Income Tax Assessment - The court set aside the assessment order and notices of demand as the petitioners were not granted a personal hearing, and directed the Assessing Officer to pass a fresh order after granting personal hearing to the petitioners.
Fact of the Case:
The petitioners were not granted a personal hearing by the Assessing Officer, despite an interim order directing no precipitate action to be taken against them. The Assessing Officer proceeded to pass the assessment order and issued notices of demand.
Finding of the Court:
The court set aside the assessment order and notices of demand, and directed the Assessing Officer to pass a fresh order after granting personal hearing to the petitioners.
Issues: Failure to grant personal hearing, Assessment order, Notices of demand
Ratio Decidendi: The failure to grant a personal hearing to the petitioners was a violation of their rights, and the court deemed it appropriate to set aside the assessment order and notices of demand.
Final Decision: The assessment order and notices of demand were set aside, and the Assessing Officer was directed to pass a fresh order after granting personal hearing to the petitioners.
ORDER
[Physical Hearing/Hybrid Hearing (as per request)]
CM Appl.34658/2023 in W.P.(C) 6061/2023
1. Allowed, subject to just exceptions.
W.P.(C) 6061/2023 & CM APPL. 23714/2023[Application filed on behalf of the petitioner seeking interim relief] CM Appl.34627/2023 [Application filed on behalf of the petitioner seeking to place additional documents on record]
W.P.(C) 6062/2023 & CM APPL. 23718/2023 [Application filed on behalf of the petitioner seeking interim relief]
2. The above-captioned petitions came up for hearing before the Court on 10.05.2023, when the following order was passed:
"2. These writ petitions concern Assessment Year (AY) 2016-17.
3. We are informed that the above-captioned writ petitions are connected with WP(C) 6045/2023, titled Harvinder Singh (HUF) v. Principal Commissioner of Income Tax & Anr.
4. This writ petition, concededly, raised the same issue which is also raised in the above-captioned writ petitions.
5. Counsel for the petitioners informs us that, as in the aforementioned case, the petitioners/assessees in the above- captioned writ petitions submitted replies dated 06.06.2022, whereby several defences were taken, both with regard to facts and the law.
6. Inter alia, the petitioners/assessees had also indicated that if any further clarifications were required, they should be accorded personal hearing in the matter.
7. Apparently, no personal hearing was granted by the Assessing Officer (AO), who then proceeded to pass the impugned orders dated 29.07.2022 and 30.07.2022 under Section 148A(d) of the Act.
8. Accordingly, issue notice.
8.1 Mr Gaurav Gupta, senior standing counsel, accepts notice on behalf of the respondents/revenue in WP(C) 6061/2023, while Mr Abhishek Maratha, senior standing counsel, accepts notice on behalf of the respondents/revenue in WP(C) 6062/2023.
9. Messrs Gupta and Maratha say that they will return with instructions in the matters.
9.1 In case instructions are received to resist the above- captioned writ petitions, counter-affidavit(s) will be filed before the next date of hearing.
10. List the matters on 31.05.2023.
11. In the meanwhile, no precipitate action will be taken against the petitioners.
12. Parties will act based on the digitally signed copy of the order."
3. As would be evident from the extract of the aforesaid order, the grievance of the petitioners was that no personal hearing had been granted to them.
4. Furthermore, we had also directed that no precipitate action would be taken against the petitioner/assessee.
5. It appears, that despite the interim order having been passed by us on 10.05.2023, the Assessing Officer (AO) not only proceeded to pass the assessment order, but also issued notice of demand.
6. Mr Gaurav Gupta and Mr Abhishek Maratha, learned senior standing counsel, who appear on behalf of the respondents/revenue in the above- captioned writ petitions, submit that in view of the grievance raised by the petitioners, the best course of action would, perhaps, be to set aside the orders dated 29.07.2022 and 30.07.2022 passed under Section 148A(d) of the Act, and the consequent notices of even date issued under Section 148 of the Income Tax Act, 1961 [in short, "Act"].
7. It is ordered accordingly.
8. Resultantly, the assessment order, which was passed pursuant to the aforementioned orders and notices will collapse.
8.1. Liberty is, however, given to the AO to pass a fresh order under Section 148A(d) of the Act and take, if necessary, consequent steps, albeit, after granting personal hearing to the petitioners/assessees.
8.2. The AO will issue notice the petitioners/assessees, indicating the date and time of the hearing.
9. The writ petitions are disposed of in the aforesaid terms.
10. Interim order dated 10.05.2023 shall stand vacated.
11. Consequently, pending applications shall stand closed.
12. Parties will act based on the digitally signed copy of the order.
Breach of principles of natural justice in assessment proceedings under the Income Tax Act, 1961.
Grant of personal hearing is a mandatory requirement under Section 144B(6)(vii) of the Income Tax Act, and failure to provide such a hearing can result in the setting aside of the assessment order.
A personal hearing is essential in tax assessment procedures to ensure administrative fairness; failure to provide one invalidates the assessment orders.
Failure to grant a personal hearing by the Assessing Officer violates principles of natural justice, necessitating the annulment of the assessment order.
Denial of a personal hearing in income assessment cases under Section 144B(6)(vii) violates natural justice, necessitating the assessment order's cancellation.
The court upheld the necessity of granting a personal hearing under Section 144B(7) of the Income Tax Act, emphasizing that natural justice principles must be respected in assessment processes.
The obligation of the revenue to consider the request for a personal hearing and the absence of framed standards, procedures, and processes for dealing with such requests.
The main legal point established in the judgment is that the principles of natural justice, including the right to a personal hearing, must be adhered to in the assessment proceedings under the Incom....
The central legal point established in the judgment is the statutory right of the petitioner to a personal hearing under Section 144B(7)(vii) of the Income Tax Act, 1961, and the requirement for the ....
Failure to grant a personal hearing in tax assessments, as required under Section 144B of the Income Tax Act, renders such assessments non-est in law.
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