Bombay HC Quashes IT Assessment for Breach of Natural Justice, Orders Fresh Hearing

The Bombay High Court has reiterated that a tax assessment order passed without granting the assessee an effective personal hearing violates the principles of natural justice.

A Division Bench of Justice B.P. Colabawalla and Justice Firdosh P. Pooniwalla was hearing a writ petition filed by Yogesh Mangalsen Behl, challenging the assessment under Section 143(3) of the Income Tax Act, 1961, and the consequential demand notice issued under Section 156. The Bench noted that the assessment was challenged “on the short ground that it is passed in breach of principles of natural justice.”

The assessee contended that he had specifically requested a personal hearing via video conferencing and indicated his preferred date. While the Income Tax Portal reflected that a video hearing was scheduled, he never received proper intimation or the video link.

The Revenue argued that the link had been sent by email. However, the assessee stated that it was sent to an old email ID no longer in use, which had already been updated in the income tax records for subsequent years.

The Court sought instructions from the Revenue on whether a fresh hearing could be granted. Upon inquiry, the Revenue confirmed that the assessee would be given a personal hearing and that a fresh assessment order would be passed thereafter.

In view of the fair stand taken by the Revenue, the Court held:

“We hereby quash and set aside the Assessment Order dated 30th April 2023 passed under Section 143(3) as well as the Demand Notice issued under Section 156 dated 30th April 2023.”

The Bench remitted the matter to the Jurisdictional Assessing Officer, directing that a proper personal hearing be granted and a reasoned assessment order be passed in accordance with law, to be completed within 12 weeks.

The Court clarified that it had not examined the merits of the tax dispute and all issues were left open.

Appearance for the Petitioner: Mr.Sanket S. Bora a/w Deepak Sharma, Arrchena Shetty, Vidhi K. Punmiya, Amiya R. Das i/b SPCM Legal

Appearance for the Respondents: Mr.Vikas T. Khanchandani, Advocate for the Revenue/Respondents.