Gurumukh Ahuja vs. Income Tax Department

1 IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR BEFORE HON’BLE SHRI JUSTICE SHEEL NAGU & HON’BLE SHRI JUSTICE MANINDER S. BHATTI ON THE 26th OF APRIL, 2022 WRIT PETITION NO.9013 OF 2022 Between:- GURUMUKH AHUJA S/O PRAHLAD AHUJA, AGED ABOUT 44 YEARS, OCCUPATION: BUSINESS R/O F-12, PANCHSHEEL NAGAR, NARMADA ROAD, JABALPUR (M.P.) .....PETITIONER (BY SHRI G.N. PUROHIT, SENIOR ADVOCATE WITH SHRI NITIN AGRAWAL, ADVOCATE) AND 1. INCOME TAX DEPARTMENT THROUGH INCOME TAX OFFICER NATIONAL FACELESS E-ASSESSMENT CENTRE, DELHI, INDIA. 2. INCOME TAX OFFICER WARD 2(1) INCOME TAX OFFICE AAYKAR BHAWAN, NAPIER TOWN JABALPUR M.P ....RESPONDENTS (BY SHRI SANJAY LAL, ADVOCATE) WRIT PETITION NO.9014 OF 2022 Between:- GURUMUKH AHUJA S/O PRAHLAD AHUJA, AGED ABOUT 44 YEARS, OCCUPATION: BUSINESS R/O F-12, PANCHSHEEL NAGAR, NARMADA ROAD, JABALPUR (M.P.) 2 .....PETITIONER (BY SHRI G.N. PUROHIT, SENIOR ADVOCATE WITH SHRI NITIN AGRAWAL, ADVOCATE) AND 1. INCOME TAX DEPARTMENT THROUGH INCOME TAX OFFICER NATIONAL FACELESS E-ASSESSMENT CENTRE, DELHI, INDIA. 2. INCOME TAX OFFICER WARD 2(1) INCOME TAX OFFICE AAYKAR BHAWAN, NAPIER TOWN JABALPUR M.P ....RESPONDENTS (BY SHRI SANJAY LAL, ADVOCATE) These writ petitions coming on for admission this day, Hon’ble Shri Justice Maninder S. Bhatti passed the following: ORDER As the issue involved in both the writ petitions is similar, they are heard analogously and are being decided by a common order. However, for the sake of clarity and convenience the facts of W.P. No.9013 of 2022 are being taken into consideration. 2. The petitioner has filed the present writ petition challenging three even dated orders, i.e. 28-03-2022 contained in Annexure-P/20, Annexure-P/21 and Annexure-P/22 respectively. 3 3. The facts which are setforth in the petition are to the effect that petitioner herein, who is an individual and regular income tax assessee, submitted his return on 3-8-2021 (Annexure-P/3). Thereafter, the petitioner received a notice under Section 142(1) of the Income Tax Act, 1961 [for brevity “the Act”] dated 23-7-2021 by which the petitioner was called upon to provide details pertaining to his business activities. 4. The petitioner submitted his reply to the said notice, whereafter the petitioner was issued notices under Section 142(1) of the Act which are contained in Annexure-P/6 to Annexure-P/9. Thereafter, the petitioner was issued another notice dated 20-01-2022, Annexure-P/14. In response to the said notice the petitioner submitted his reply and then during course of process he was issued another notice dated 23-3-2022, Annexure-P/18 calling upon to submit details pertaining to the issue raised in the notice dated 23-03-2022. 5. In response to the notice dated 23-03-2022 the petitioner submitted his reply dated 27-03-2022 which is contained in Annexure-P/19. In his reply the petitioner submitted that an opportunity of personal hearing be afforded to petitioner before passing a final order. However, respondents passed final assessment order which is contained in Annexure-P/20. 4 6. The petitioner has challenged the assessment order contained in Annexure-P/20. The order further ensued in a notice of demand under Section 156 of the Act as well as notice for penalty under Section 271(1)(c) of the Act, which are contained in Annexure-P/21 and Annexure-P/22 respectively. Thus, the petitioner has approached this Court challenging the order dated 28-03-2022, Annexure-P/20, notice of demand dated 28-03- 2022, Annexure-P/21 and notice for penalty dated 28-03-2022 contained in Annexure-P/22. 7. Counsel for petitioner submits that the issue in question, in fact, revolves around the notice dated 23-03-2022, Annexure-P/18 by which the petitioner was called upon to show cause, as to why the proposed variation should not be made in the assessment for the Assessment Year 2014-15. In response to the same, the petitioner submitted his reply dated 27-03-2022 contained in Annexure-P/19. Learned counsel for petitioner submits that upon receipt of notice which was issued to him under Section 142 of the Act, he demanded an opportunity of physical personal hearing, which has not been afforded to him and, therefore, the entire proceedings have been vitiated. 8. Learned counsel for petitioner while taking this Court to Section 144-B of the Act has submitted that an opportunity of personal hearing ought 5 to have been afforded to the petitioner. He also referred to Section 142(1) of the Act and submitted that an opportunity of personal hearing was not afforded to the petitioner. He strenuously urged that opportunity of hearing is not merely an empty formality. Learned counsel for petitioner while taking this Court to the provision of Section 144B(7)(vii) of the Act submitted that the said provision specifically postulates an opportunity to the assessee to show cause as to why the assessment should not be completed and it is the right of the assessee to seek personal hearing, so as to make his oral submissions and present his case before the Income Tax Authority. 9. Learned counsel for petitioner thus, relied upon the decision of the High Court of Judicature at Bombay passed in Writ Petition No.1625 of 2021 [Mantra Industries Limited vs. National Faceless Assessment Centre (NFAC or NeAC) & Ors.] and has prayed for quashment of the impugned order and notices. 10. Per contra, learned counsel for respondents submits that the petitioner was well informed about the process of personal hearing through virtual mode, inasmuch as during outbreak of Covid-19, physical hearing not allowed. Thus, as per Faceless Assessment Scheme, provisions were made to afford an opportunity of hearing to the assessee through virtual mode. 6 Learned counsel submitted that even the said option was given to the petitioner as well, but he did not avail the same. 11. Learned counsel for Revenue by placing reliance upon the decision of a Co-ordinate Bench of this Court in Writ Petition No.11258 of 2021, dated 28-01-2022 and the orders passed by the High Court of Delhi in W.P.(C) No.965/2021, dated 29-01-2021 and the Apex Court in the case of Commissioner of Income Tax vs. Vijaybhai N. Chandrani, decided on 18-7- 2013, submitted that that the instant petition deserves to be dismissed, as the same has been filed on misconceived and untenable grounds. 12. We have heard learned counsel for parties at length. 13. Before dealing with the issue, it would be appropriate to refer to Section 144-B of the Act. Relevant parts of the said provision are extracted hereunder : “144B.(1). Notwithstanding anything to the contrary contained in any other provisions of this Act, the assessment under sub-seiction (3) of Section 143, in the cases referred to in sub-section (2), shall be made in a faceless manner as per the following procedure, namely - xx xx xx ** ** ** (7) For the purpose of faceless assessment - (i) xx xx xx ** ** ** 7 (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 authorized representative, as the case may be, may request for personal hearing so as to make his oral submissions or preset his case beore the income-tax authority in any unit.” 14. Thus, a perusal of the aforesaid provision incorporated in the statute books reveals, that an opportunity of personal hearing is provided under Section 144B(7)(vii) of the Act, however, it does not postulate that hearing should be “physical”. In the present case, the most important aspect of the matter is, notice dated 20-01-2022, Annexure-P/14 at page number 56 of the compilation of the petition. The last paragraph of this notice is important, where it transpires that prior to this notice the petitioner had sought for an opportunity of personal hearing while appearing physically. Thus, while dealing with request of the petitioner in the last paragraph of the notice the petitioner was advised in the following terms : “Further, in your response, you have requested for personal hearing. In this connection it is stated that in the Faceless Assessment Scheme there is no provision for physical hearing and physical hearing is altogether not permissible. The guidelines relating to Faceless Assessment Scheme are attached as Annexure to 142(1). You are requested to go through the 8 same and opt for available methods of hearing through procedure as mentioned in the Annexure.” 15. A perusal of operative paragraph of the aforesaid notice makes it abundantly clear that way-back on 20-01-2022, it was made clear to the petitioner that by virtue of the Faceless Assessment Scheme, there was no provision for physical hearing and physical hearing was not permissible. Thus, the petitioner was requested to go through the guidelines relating to Faceless Assessment Scheme and accordingly opt available modes of hearing through the procedure as mentioned therein. 16. Interestingly, the petitioner submitted reply to the notice dated 20-01-2022 which is contained in Annexure-P/15 at page number 58 of the memo of writ petition. This notice is not only important, but also relevant for disposal of this writ petition, inasmuch as, upon receipt of notice dated 20-01-2022 the petitioner while submitting his reply on 30-01-2022 did not dispute the last paragraph of the notice to show cause dated 20-01-2022, meaning thereby, the petitioner acquiesced to the method which was advised by the respondent for the purposes of personal hearing. Hence, the reply of the petitioner, Annexure-P/15 at page number 58 of the compilation makes it abundantly clear, that even after receipt of notice dated 20-01-2022 the petitioner did not oppose it nor even dealt with the last paragraph of the 9 notice, meaning thereby, the petitioner accepted the same without any demur or protest. 17. However, contention of the petitioner is that he demanded an opportunity of physical hearing vide reply which is contained in Annexure- P/19, which ought to have been taken into consideration. Again, if Annexure-P/18 and Annexure-P/19 are perused, the same would reveal that Annexure-P/18 is another notice issued to the petitioner, dated 23-03-2022, and in this notice also, in the last paragraph the petitioner was again apprised of the process of video conferencing for the purposes of hearing, which is evident from perusal of page number 102 of the memo of petition. Despite this the petitioner in his reply dated 27-03-2022, Annexure-P/19 demanded physical hearing, his request in our considered view was misconceived. 18. Apparently, an opportunity in accordance with law was provided to the petitioner, and the petitioner was well advised by respondents to take recourse to virtual mode of hearing through the guidelines relating to Faceless Assessment Scheme, which the petitioner did not opt for. During course of arguments, the petitioner has provided the screenshots of the assessment home page,which shows that though video conferencing option was available, but the petitioner did not opt for it, and still kept on insisting for physical hearing. 10 19. In our considered view, the request so made by the petitioner for physical hearing was misconceived and Section 144B(7)(vii) of the Act does not postulate physical hearing. A method for opportunity of hearing was well advised to the petitioner, however, he did not opt for the same. Therefore, at this stage, the petitioner cannot challenge the order impugned as well as subsequent notices, which are impugned in the instant petition and the same deserves to be dismissed. 20. Accordingly, in view of similitude of issue involved in both the writ petitions, the same are dismissed by this composite order. There shall be no order as to costs. ( SHEEL NAGU) (MANINDER S. BHATTI )

JUDGE JUDGE ac. AJAY KUMAR CHATURVEDI Digitally signed by AJAY KUMAR CHATURVEDI DN: c=IN, o=HIGH COURT OF MADHYA PRADESH, ou=HIGH COURT OF MADHYA PRADESH, postalCode=482001, st=Madhya Pradesh, 2.5.4.20=3796e6c1d0b4cce5f8c8561cdbb3a238176d46898b715c1662ee8b05eed57eb0, pseudonym=7812D41F1F531DBC0B9219827A0B19AAEAA0618E, serialNumber=C8EAAC30EFBB2F0C7E41AE53BEEC562C515B38978E4597AA3C73D309F0F1FBB9, cn=AJAY KUMAR CHATURVEDI Date: 2022.05.06 11:34:55 +05'30'