Given the advancement in technology, the government has doubled down on its effort to implement tax technology transformation to promoting ease of business and to reduce the incidence of wrongdoings. Now technology is the vehicle which is used to carry out the assessment proceedings which were otherwise physically/manually carried out by the department. This has been replace with the concept of “faceless assessment”.
The entire process of filing the submissions moved online on income tax portal, wherein the portal generates a separate acknowledgement number for each filing made by the assessee. Thereby, removing the physical interaction between the assessee's and the department. Notwithstanding, this technological transformation, there also a seems to be a shift in the process of assessment and the attitude of the department.
In the recent case of Umkal Healthcare (P.) Ltd. v. National Faceless Assessment Centre [2021 (8) TMI 1049 - DELHI HIGH COURT] The writ petition was filed by the assessee challenging the Assessment Order passed by the AO under Section 143(3) of Income Tax Act, 1961 ('Act') read with Section 144B of the Act and a notice of demand issued under Section 156 of the Act and all proceedings initiated pursuant thereto. It was stated by the assessee 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 of the Act.
However, the Department submitted that the expression used under Section 144B(7)(vii) of the Act is 'may' and not 'shall'. Therefore, it must be interpreted merely as directory provision and that there was no vested right in the assessee to claim a personal hearing.
The Hon'ble Delhi High Court following its order given in the case of Sanjay Aggarwal v. National Faceless Assessment Centre [2021 (6) TMI 336 - DELHI HIGH COURT] held that upon careful perusal of Section 144B(7) of the Act, will show that leeway has been given to the assessee to seek a personal hearing, in case their income is varied during assessment. Further, the process faceless assessment encapsulated under Section 144B of the Act, is laid down to bring transparency as well as accountability in the system. Therefore, the usage of the word 'may' cannot absolve the department from the obligation cast upon it to consider the request made for grant of personal hearing.
Our Comments
Since the introduction of faceless assessments under the Act, there have been several instances where: [1] The assesses were not given a show cause notice ('SCN'); [2] Insufficient time was provided to respond to the SCN; [3] Personal hearing was not granted upon request; [4] Order passed before date of compliance as per SCN; [5] Submissions not being considered; [6] Non-Working of the Portal etc.
The above order of the Hon'ble Delhi High Court certainly reinforces the principles of natural justice, irrespective of whether such a statutory scheme was framed or not. Further, such judicial intervention is a welcome step as it ensures the system is both, transparent, and accountable.
[1] RMSI Private Limited v. National E-Assessment Centre, 2021 (7) TMI 745 - DELHI HIGH COURT
[2] Sureshkumar S. Lakhotia Vs National e-Assessment Centre, Writ Petition No. 2848 of 2021 (BOM) order dated 08 September 2021
[3] Chander Arjandas Manwani v. The National Faceless Assessment Centre, 2021 (9) TMI 1108 - BOMBAY HIGH COURT
[4] Antony Alphonse Kevin Alphonse v. The Income Tax Officer, 2021 (5) TMI 362 - MADRAS HIGH COURT
[5] Mantra Industries Limited v. National Faceless Assessment Centre, 2021 (10) TMI 750 - BOMBAY HIGH COURT
[6] Fariq Chand v. National E-Assessment Center, WP(C) no. 8054 of 2021 (DEL) order dated 09 August 2021
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