Right to Personal Hearing is a Vested Right of Assessee under Income Tax Law: ITAT directs NFAC to Re-Do Proceedings [Read Order]

In a significant ruling, the Amritsar bench of the Income Tax Appellate Tribunal (ITAT) has held that the right to personal hearing is a vested right of the assessee under section 144B(1)(xvi) of the Income Tax Act, 1961.

The assessee, Smt. Parmjit Kaur approached the ITAT on second appeal contending that the impugned orders have been passed arbitrarily, without following the principles of natural justice and in gross violation of the scheme of faceless assessment under section 144B of the Act, inasmuch in absence of Notice u/s 142(1) served to the assessee, the whole proceeding are void-ab-initio, hence liable to set aside.

Dr. M. L. Meena, Accountant Member and Sh. Anikesh Banerjee, Judicial Member observed that “a quasi - judicial body must normally grant a personal hearing as no assessee or litigant should get a feeling that he never got an opportunity or was deprived of an opportunity to clarify the doubts of the Assessing Officer. Consequently, the word "may" in section 144B(viii) should be read as "must" or "shall" and requirement of giving an assessee a reasonable opportunity of personal hearing is mandatory. Consequently, 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.”

Allowing the contentions of the assessee, the ITAT held that “the mandate provides that the Section 144B(1)(xvi) provides an opportunity to the assessee by serving a Show Cause Notice in case any variation of assessment is proposed which is prejudicial to the interest of assessee, and that Section 144B(1)(xxv) provides for issuance of draft assessment order to the assessee after considering the reply to Show Cause Notice. In the present case, it is undisputed fact on record that the AO has not issued the draft assessment order proposing variations for which no Show Cause Notice was ever issued to the appellant assesse.”

“In the above view, we accept the grievance of the assesse as genuine and consequently, the impugned order of the CIT(A) is set aside and the matter is remanded back to the AO to pass de novo assessment order as per law prescribed u/s 144B of the Act after granting proper opportunity of being heard to the assesse. We make it clear that personal hearing could not be limited to cases involving disputed questions of fact but would also include cases involving issues of law, thus, assessee would have a vested right to personal hearing in instant faceless assessment proceeding,” the ITAT concluded.

To Read the full text of the Order CLICK HERE

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