Gujarat HC Quashes Faceless Assessment for Denial of Video Hearing; Orders Fresh Order per SOP

Gujarat HC Quashes Faceless Assessment for Denial of Video Hearing; Orders Fresh Order per SOP

The Gujarat High Court has recently quashed an assessment order issued by the Income Tax Department, which violated the principles of natural justice in tax assessments.

The company, Tyger Capital Pvt Ltd., filed its return for the assessment year 2023-24, declaring an income of Rs 47,64,30,230. However, the company claimed that the show-cause notice was issued on February 22, 2025, on an old email address. When the company came to know about the notice on February 28, 2025, it requested a personal hearing through video conferencing, which was scheduled on 03.03.2025. During the conference, the company requested a one-week adjournment to comply with the show-cause notice (22.02.2025). The Income Tax Department granted three days for the same and directed the company to file the reply by 06.03.2025.

Also Read
Bombay HC: Provision for Doubtful Debts Not a Reserve Under Section 115JA; Book Profits Cannot Be Increased

The company also filed a detailed explanation on 06.03.2025 and requested a video conference hearing, one more time. But the Income Tax Department issued the assessment order on March 19, 2025, without giving a hearing. The company claimed that this was a violation of the principles of natural justice and therefore challenged the order before the High Court of Gujarat.

The Gujarat High Court referred to the Standard Operating Procedure (SOP) dated 03.08.2022 for faceless assessments, which requires that taxpayers be given a chance for a video hearing if requested. If an assessee is not given this mandatory requirement of a video conference for a personal hearing, it would be a clear violation of the principles of natural justice.

Also Read
GST: Delhi HC Orders Refund with Interest as Deficiency Memo Missing; Allows Delayed Appeal on First Claim

As the Income Tax Department had failed to follow the mandatory requirement of the Standard Operating Procedure, the High Court quashed and set aside the assessment order dated 19.03.2025 and the demand notice dated 19.03.2025. The matter is remanded back to the National Faceless Assessment Authority. The court has directed to pass a fresh order.