Faceless Assessment Scheme does not take away right to personal hearing: Delhi HC

New Delhi: The requirement of giving an assessee a reasonable opportunity of personal hearing is mandatory under the Income Tax Act (if the assessee asks for it) and the provision of Faceless Assessment Scheme does not mean that no personal hearing can be granted, the Delhi High Court ruled on Friday (Bharat Aluminium Company Limited v Union of India and Ors).

A Division Bench of Justices Manmohan and Navin Chawla said that the Court failed to understand as to how grant of a personal would either frustrate or defect the concept and purpose of Faceless Assessment Scheme.

"This Court is of the opinion that a faceless assessment scheme does not mean no personal hearing. It is not understood as to how grant of personal hearing would either frustrate the concept or defeat the very purpose of Faceless Assessment Scheme," the judgment said.

The Faceless Assessment Scheme was introduced by the Central government in 2020 by insertion of Section 144B via the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.

The High Court held that the word "may" used in Section 144B(viii) of the Act should be read as "must" or "shall" and requirement of giving an assessee a reasonable opportunity of personal hearing is mandatory.

"This Court is of the opinion that an assessee has a vested right to personal hearing and the same has to be given, if an assessee asks for it. The right to personal hearing cannot depend upon the facts of each case," the High Court ruled.

The Bench was dealing with a petition filed by Bharat Aluminium Company Limited challenging the final assessment order and noted by the Income Tax Department under Section 143(3) of the Income Tax Act.

The petition argued that the order was passed without following the principle of natural justice and in violation of the scheme under Section 144B of the Act as even after the 'nil' variation proposed in the show cause notice, addition had been made to the assessed income.

It was alleged that the additions to the assessed income was made on the 'false premise' that the petitioner had not furnished relevant details in response to the statutory notice issued to them even though it was the respondents' own portal which was facing technical glitches due to which the petitioner failed to upload the file.

The petitioner further argued that under Section 144B(1)(xvi) of the Income Tax Act, an opportunity has to be provided to the assessee in case any variation of the assessment is proposed which is prejudicial to his interest. However, in this case after proposing a 'nil" variation, the respondents took a turnaround and issued the draft assessment order proposing variations for which no show cause notice was ever issued. The Court said that it was unable to comprehend as to how despite 'nil' variation proposed in the show cause notice, additions had been made to the assessed income.

It further opined that an assessee has a vested right to personal hearing and the same has to be given, if an assessee asks for it.