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.

JUDGMENT

Manmohan, J.: (Oral)--The hearing has been conducted through video conferencing.

2. Present writ petition has been filed challenging the assessment order dated 22nd June 2021 passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961 [for short `the Act'], notice of demand dated 22nd June 2021 passed under Section 156 of the Act and notice for penalty dated 22nd June 2021 passed under Section 274 read with Section 270A of the Act for the Assessment Year [AY] 2018-19. Petitioner also seeks a direction to restrain the respondents from giving effect to the impugned assessment orders and notices.

3. Learned counsel for the Petitioner states that vide Show Cause Notice dated 22nd April 2021, the Respondent gave the Petitioner very short time to submit its reply, i.e. by 25th April 2021, 23:59 hours.

4. He states that subsequently, the Petitioner made request to the Respondent for grant of adjournment for fifteen days as the time allowed was too short taking into consideration the complexity of the issue and the prevalent lockdown, due to which the employees were not able to reach their place of work.

5. He states that the adjournment as sought by the Petitioner was granted whereby the time to file submissions was extended to 26th May 2021.

6. He points out that the Petitioner vide response dated 25th May 2021, in addition to a detailed reply, categorically requested for grant of personal hearing to explain its case. However, neither the response was considered nor a personal hearing was granted and in fact the respondent passed the impugned order dated 22nd June, 2021.

7. He submits that the said impugned order and notices have been passed without proper appreciation of the facts of the present case and without affording the Petitioner an opportunity of hearing, which is in gross violation of principles of natural justice and therefore is not in accordance with the provisions of the Act, i.e., clause (vii) of sub-section (1) of Section 144B and Section 144B (7) as well as provisions of the Scheme.

8. He further adds that the reason given by Respondent while passing the impugned assessment order for not considering the detailed submission/objection filed by the petitioner, namely, that it was without a covering letter, was not warranted and is against the basic purpose for which faceless assessment was introduced.

9. Issue notice. Mr.Puneet Rai, learned senior standing counsel accepts notice on behalf of respondent.

10. Mr.Rai states that the expression used in clause (vii) of sub-Section (7) of Section 144B is 'may' and not 'shall' and therefore, there is no vested right in the petitioner to claim a personal hearing.

11. Having heard learned counsel for the parties, this Court is of the view that Section 144B (7) provides for a personal hearing. The relevant portion of Section 144B (7) is 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 A