Kerala HC: Faceless Assessment Denials Require Re-hearing

In a significant ruling concerning the transparency of the "faceless" assessment system, the High Court of Kerala has emphasized that technical glitches in virtual hearing procedures cannot be used to deny an assessee their fundamental right to be heard. Justice Ziyad Rahman A.A. delivered the judgment, which effectively quashed an assessment order and mandated a fresh opportunity for the petitioner, Anish Thomas.

Technical Hurdles and the Quest for Fair Hearing

The dispute originated from the assessment year 2020-21. Petitioner Anish Thomas, an assessee under the Income Tax Act , 1961, faced a challenge regarding an appeal order (Ext.P16) that rejected his claims without providing adequate hearing.

The crux of the matter was not a refusal to participate on the part of the petitioner, but rather a series of administrative and technical failures. Mr. Thomas, who was in the United States at the time of the scheduled hearing, contended that the department’s notification (Ext.P12) failed to provide a valid hyperlink for the video conference. Despite his attempts to access the hearing and his proactive communication to the authorities, the link issue persisted. Furthermore, a valid link was subsequently transmitted at an hour (3:13 a.m. CDT) that made participation impossible, as the scheduled hearing time had already lapsed.

The Territorial Jurisdiction Defense

During the proceedings, the Income Tax department argued that the High Court of Kerala lacked territorial jurisdiction. The respondents pointed out that the assessing and appellate authorities were located in Delhi, and the petitioner’s Income Tax PAN was registered to an address in Noida.

However, the Court dismissed this, citing the petitioner's permanent residency in Kerala and the fact that the assessment was conducted via a centralized "faceless" method. Justice Ziyad Rahman A.A. noted that the Court had previously entertained writ petitions regarding the same appeal, establishing a clear link to the state.

Key Observations

The Court’s decision rested on the principle that the right to a fair hearing cannot be bypassed due to system constraints. Highlighting the unfairness of the previous process, the judgment stated:

> "The documents now made available before this Court would indicate a probable case for the petitioner that, he could not avail an opportunity of hearing, offered to him, for the reasons not attributable to him."

The Court further observed the implications of the department's rigid stance:

> "The impugned order would also indicate that, the order was passed without hearing the petitioner and after entering into a finding that the petitioner did not avail the opportunities of hearing offered to him."

On the necessity of the reassessment, the Court held:

> "Apparently, the petitioner could not utilize the opportunities, for the reasons beyond his control. Therefore, I am of the view that, the petitioner can be extended a further opportunity."

The Road Ahead: A Call for Procedural Integrity

By quashing the impugned order (Ext.P16), the High Court has sent a clear message to tax authorities: procedural formalities in virtual systems must be functional and communication must account for the logistical realities of the taxpaying public.

The 2nd respondent is now directed to pass fresh orders on the petitioner's appeal after ensuring a proper hearing is conducted. This ruling serves as a vital precedent for assessees who find themselves prejudiced by technical failures in faceless litigation, reinforcing that the "faceless" nature of tax administration should not equate to a "voiceless" experience for those seeking justice.