Not providing personal hearing in faceless assessment is a violation of principle of natural justice: Delhi HC

Case Details: Umkal Healthcare (P.) Ltd. v. National Faceless Assessment Centre - [2021] 131 taxmann.com 325 (Delhi)

Judiciary and Counsel Details

• • Manmohan and Navin Chawla, JJ.
  • Satyen Sethi, Adv. for the Petitioner. 
  • Sunil Agarwal, Sr. Standing Counsel and Tushar Gupta, Jr. Standing Counsel for the Respondent.

Facts of the Case

The instant writ petition was filed by the assessee challenging the Assessment Order passed by the AO under section 143(3) read with section 144B. He stated that the impugned order was passed without affording a personal hearing, even when specifically requested. Hence, the order is violative of the principles of natural justice and section 144B.
AO submitted that the expression used in section 144B(7)(vii) is ‘may’ and not ‘shall’, and therefore, there is no vested right in the assessee to claim a personal hearing.

High Court Held

The Delhi High Court has quoted the ruling given in the case of Sanjay Aggarwal – [2021] 127 taxmann.com 637 (Delhi). The Delhi HC held that a careful perusal 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, to our minds, the usage of the word ‘may’ cannot absolve the respondent/revenue from the obligation cast upon it to consider the request made for grant of personal hearing.
Applying the same ratio, the Court has held that since in the present case, no hearing had been granted before passing the assessment order, there is a violation of principles of natural justice as well as the mandatory procedure prescribed in the “Faceless Assessment Scheme” and stipulated in section 144B.

List of Cases Referred to

• • Sanjay Aggarwal v. National Faceless Assessment Centre [2021] 127 taxmann.com 637/281 Taxman 282/436 ITR 180 (Delhi)