The right to personal hearing in faceless assessments under Section 144B of the Income Tax Act is mandatory and must be granted when requested, reinforcing adherence to principles of natural justice.

JUDGMENT

Manmohan, J.

1. Present writ petition has been filed by the petitioner challenging the action of respondent No.3 in passing the impugned final assessment order dated 27th November, 2021 under Section 143 (3) of the INCOME TAX ACT , 1961 [for short `the Act'] and the impugned notice dated 27th November, 2021 under Section 156 of the Act for Assessment Year 2018-19.

ARGUMENTS ON BEHALF OF THE PETITIONER

2. Mr. Arvind Datar, learned senior counsel for the petitioner 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 as even after the `Nil' or `Null' variation proposed in the show cause notice, additions had been made to the assessed income in the draft assessment order as well as in the impugned final assessment order.

3. He contended that respondent No.3 in the draft assessment order as well as in the impugned final assessment order had proceeded to make additions to the assessed income on the false premise that the petitioner had not furnished relevant details/information in response to the statutory notice dated 19th August, 2021, issued under Section 142 (1) of the Act. He stated that respondent No.3 had failed to appreciate that the petitioner was unable to upload the file due to technical glitches on the respondent's own portal. He emphasised that the petitioner had still filed reply to the notice that too within the due date vide email dated 3rd September, 2021 and, thus, there was no non-compliance on the part of the petitioner.

4. Mr. Arvind Datar submitted that while 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, Section 144B(1)(xxv) provides for issuance of draft assessment order to the assessee after considering the reply to Show Cause Notice. He emphasized that in the present case, respondent No.3 issued a Show Cause Notice under Section 144B(1)(xvi) proposing `Null' or `Nil' variation and the petitioner duly confirmed the same vide letter dated 16th September, 2021. However, thereafter, respondent No.3 took a complete turnaround and issued the draft assessment order proposing variations for which no Show Cause Notice was ever issued to the petitioner.

5. He pointed out that this Court in multiple cases, including Rani Promoter Pvt. Ltd. vs. Additional Commissioner of Income Tax, 2021(7) TMI 919-Delhi High Court and Toplight Corporate Management (P.) Ltd. vs. National Faceless Assessment Centre Delhi, (2021) 128 taxmann.com 221 (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. He even stated that in the instant case, the Show Cause Notice, referred to in the final Assessment Order, was never served upon the petitioner.

6. He also stated that the petitioner had not been granted any opportunity of personal hearing, despite a specific request having been made under Section 144B(7) of the Act by the petitioner. He submitted that Section 144B(7)(vii), (viii) and (ix) provides opportunity of personal hearing through video conferencing where such option is exercised by the assessee. He stated that this Court