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August 6, 2021

Delhi HC set aside order passed by AO as no personal hearing was granted to assessee

Delhi HC set aside order passed by AO as no personal hearing was granted to assessee

Fact and Issue of the case

Present writ petition has been filed challenging the assessment order dated 20th May 2021 issued by Respondent Nos. 1 to 6 under Section 143(3) read with Section 144B of the Income Tax Act, 1961 [for short ‘the Act’] for Assessment Year 2018-2019 and notice of demand dated 20th May, 2021. Petitioner also challenges the show cause notice and draft assessment order both dated 19th April, 2021, penalty notice dated 20th May, 2021 under Section 274 read with Section 271AAC(1) of the Act issued by Respondents.

Observation of the court

The learned Predecessor Division Bench in Sanjay Aggarwal v. National Faceless Assessment Centre Delhi in W.P. (C) 5741/2021, while interpreting aforesaid section has held as under:-

“11.4. A careful perusal of clause (vii) of Section 144B (7) would show that liberty has been given to the assessee, if his/her income is varied, to seek a personal hearing in the matter. Therefore, the usage of the word ‘may’, to our minds, cannot absolve the respondent/revenue from the obligation cast upon it, to consider the request made for grant of personal hearing. Besides this, under sub-clause (h) of Section 144B (7)(xii) read with Section 144B (7) (viii), the respondent/revenue has been given the power to frame standards, procedures and processes for approving the request made for according personal hearing to an assessee who makes a request qua the same.

11.5. In several matters, we have asked the counsels for the revenue as to, whether any standards, procedures and processes have been framed for dealing with such requests. The response, which we have got from the standing counsels including Mr. Chandra, is that, to the best of their knowledge, no such standards, procedures as also processes have been framed, as yet.

12. Therefore, in our view, given the aforesaid facts and circumstances, it was incumbent upon the respondent/revenue to accord a personal hearing to the petitioner. As noted above, several requests had been made for personal hearing by the petitioner, none of which were dealt with by the respondent/revenue.

12.1. The net impact of this infraction would be that, the impugned orders will have to be set aside. It is ordered accordingly.”

Keeping in view the aforesaid facts and mandates of law, the impugned assessment order dated 20th May, 2021 as well as notice of demand and penalty notice are set aside and the matter is remanded back to the Assessing Officer, who shall grant an opportunity of hearing to the petitioner by way of a Video Conferencing and thereafter pass a reasoned order in accordance with law.

With the aforesaid direction, the present writ petition along with pending applications stand disposed of.

Conclusion

The court ruled in favour of the assessee and disposed off the petition

Read the full order from below

Delhi-HC-set-aside-order-passed-by-AO-as-no-personal-hearing-was-granted-to-assessee

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