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The Hon’ble Delhi High Court in Sanjay Aggarwal v. National Faceless Assessment Centre, Delhi [Writ Petition (C) 5471/2021 dated June 2, 2021] held that the usage of word ‘may’ under Section 144B(7)(vii) of the Income Tax Act, 1961 (“IT Act”) could not absolve the Revenue (“the Respondent”) from the obligation cast upon it to consider the request made for grant of personal hearing. Therefore, the assessment order passed by the Respondent without giving an opportunity of personal hearing to the assessee shall be set aside.
Sanjay Aggarwal (“the Petitioner”) is an individual. The return was filed by the Petitioner for the Assessment Year 2018-19 declaring income of Rs. 33,43,690/-. The return was processed under Section 143(1) of the IT Act and on September 22, 2019, a notice was issued, under Section 143(2) of the IT Act read with Rule 12E of the Income Tax Rules, 1962, (“IT Rules”) in which the Petitioner’s return was picked up for scrutiny.
Further, another notice dated December 6, 2020 was issued to the Petitioner under Section 142(1) of the IT Act for assessment, and a reply dated February 25, 2021 was furnished by the Petitioner.
Subsequently, a show cause notice-cum-draft assessment order dated April 13, 2021, was served by the Respondent which disallowed Rs. 1,00,26,692/-under Section 57 of the IT Act.
The Petitioner made several requests to the Respondent for grant of personal hearing on April 15, 2021, and April 20, 2021, but the Respondent did not pay heed to these requests and issued a second show-cause notice along with a draft assessment order dated April 23, 2021. Consequently, a proposal was made to vary the income, resulting in the enhancement of the declared income to Rs. 1,33,70,380/- by the Respondent.
The Respondent thus without holding a personal hearing passed the assessment order dated April 28, 2021 (“the Impugned Order”)
Being aggrieved by the Impugned Order, the Petitioner has filed the present writ-application.
Whether the Revenue was under an obligation to hold personal hearing before passing the Impugned Order?
The Hon’ble Delhi High Court in Writ Petition (C) 5471/2021 dated June 2, 2021, has held as under:
Section 144B(7)(vii) of the IT Act:
“144B. Faceless assessment.
(7) For the purposes of faceless assessment-
(vii) in a case where a variation is proposed in the draft assessment order or final draft assessment order or revised draft assessment order, and an opportunity is provided to the assessee by serving a notice calling upon him to show-cause as to why the assessment should not be completed as per the such draft or final draft or revised draft assessment order, the assessee or his authorised representative, as the case may be, may request for personal hearing so as to make his oral submissions or present his case before the income-tax authority in any unit”
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