Personal Hearing through Chat Messages not Sufficient: Calcutta HC quashes Order for Not following Natural Justice Principles [Read Order]

While quashing an assessment order, the Calcutta High Court has held that the personal hearing conducted by way of exchange of chat messages cannot be said to be an effective opportunity for a personal hearing to the assessee and that it does not satisfy the test of fairness or the principles of fair play.

The assessee, SREI Equipment Finance Limited, received a show-cause notice proposing to give effect to the order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, 1961.

The division bench consisting of Justices T.S. Sivagnanam and Hiranmay Bhattacharyya reiterated that the moment an insolvency petition is admitted, in view of the moratorium that comes into effect under Section 14(1)(a) of the Insolvency and Bankruptcy Code, 2016 (IBC) there can be no institution or continuation of pending proceedings against the corporate debtor.

The Court set aside the assessment order passed against the assessee and held that the proceedings initiated against the assessee under the Income Tax Act, 1961 should be kept in abeyance till the completion of insolvency resolution proceedings against the assessee.

Quashing the order, the bench held that “the assessment order dated 30^th March 2022 is set aside and the matter is restored to the file of the assessing officer and the matter shall be kept in abeyance till the completion of the insolvency resolution proceedings. Soon after the proceedings are completed, the assessee shall inform, in writing, to the assessing officer in that regard. In the light of the observations made by us and taking note of the judgment of the Hon’ble Supreme Court in the Neeraj Garg the adverse observations and comments made against the learned Advocate for the appellant/assessee stand expunged in its entirety and the imposition of costs stands vacated.”

To Read the full text of the Order CLICK HERE

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