Case Note & Summary
The petitioner, a partnership firm registered under the Partnership Act and regularly assessed to tax under the Income Tax Act, 1961, filed its return of income under Section 139(1) for Assessment Year 2013-14 on 23.09.2013. Subsequently, the case was selected for reassessment under Section 148, and the petitioner received a notice under Section 148 on 27.07.2022. During reassessment proceedings, the petitioner received a show cause notice requiring a reply by 22.05.2023, to which the petitioner replied on 21.05.2023. The petitioner also requested a hearing through video conference. However, without considering this request, the respondents passed the final Assessment Order on 26.05.2023 under Section 147 read with Sections 144 and 144B of the Act. Aggrieved, the petitioner filed the present writ petition under Articles 226 and 227 of the Constitution seeking to quash the assessment order and the demand notice under Section 156. The court noted that the controversy was narrow and with consent of parties, heard the matter. The court observed that the petitioner had specifically requested a hearing through video conference, but the Assessing Officer did not grant such hearing and passed the best judgment assessment. The court held that Section 144B of the Act mandates that before passing a best judgment assessment, the Assessing Officer must provide an opportunity of hearing to the assessee. Failure to do so violates principles of natural justice. Consequently, the court quashed the impugned assessment order and demand notice, and remanded the matter back to the Assessing Officer for fresh consideration after providing a reasonable opportunity of hearing to the petitioner. The court directed that the petitioner be heard through video conferencing if so requested.
Headnote
A) Constitutional Law - Writs - Certiorari and Mandamus - Articles 226 and 227 of the Constitution of India - Quashing of Assessment Order - Petitioner sought to quash reassessment order passed without granting personal hearing despite request - Court held that failure to provide opportunity of hearing violates principles of natural justice and renders order invalid (Paras 4, 7-8). B) Income Tax - Reassessment - Best Judgment Assessment - Sections 147, 144, 144B of the Income Tax Act, 1961 - Opportunity of Hearing - Petitioner filed reply to show cause notice and requested video conference hearing, but Assessing Officer passed final order without granting such hearing - Court held that Section 144B mandates opportunity of hearing before passing best judgment assessment, and non-compliance vitiates the order (Paras 5.2, 7-8).
Issue of Consideration
Whether the reassessment order passed under Section 147 read with Sections 144 and 144B of the Income Tax Act, 1961 is vitiated for non-compliance with principles of natural justice, specifically the failure to grant a personal hearing despite the petitioner's request.
Final Decision
The court allowed the petition, quashed the impugned Assessment Order under Section 147 read with Sections 144 and 144B of the Income Tax Act, 1961 dated 26.05.2023 and the Demand Notice under Section 156 dated 26.05.2023, and remanded the matter back to the Assessing Officer for fresh consideration after providing a reasonable opportunity of hearing to the petitioner, including through video conferencing if requested.
Law Points
- Natural justice
- opportunity of hearing
- reassessment
- best judgment assessment
- Section 144B
- Section 147
- Section 148
- Income Tax Act
- 1961
