High Court Issues Notice and Stay on Assessment Order Under Section 144-B (of Income Tax Act, 1961)

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Case Name:

M/s Inder Prasad Mathura Lal vs. The National E-Assessment Centre & Anr.(High court of Rajasthan)

S.B. Civil Writ Petition No. 7757/2021

Date: 16th August 2021

Key Takeaways:

1. The assessment done under Section 144-B (of Income Tax Act, 1961), 1961 can be examined by the High Court without insisting upon filing of an appeal, especially when there is no provision for personal hearing.

2. The petitioner’s application for personal hearing under Section 144-B (of Income Tax Act, 1961) 7(vii) seeking an opportunity for personal hearing was denied, leading to the argument that a fair opportunity had not been provided to put up their submissions and defense.

3. The provision contained under Section 144-B (of Income Tax Act, 1961) 7 (viii), where the Chief Commissioner was required to approve the request for personal hearing, is interpreted as mandatory in nature, as the word “may” is interpreted to mean “shall” for the said purpose.

An excerpt from the order issued by Hon’ble Mr. Justice Sanjeev Prakash Sharma of the High Court of Judicature for Rajasthan, Bench at Jaipur, in the matter of S.B. Civil Writ Petition No. 7757/2021, between M/s Inder Prasad Mathura Lal (Petitioner) and The National E-Assessment Centre & Anr. (Respondents).

The order was issued on 16/08/2021 and contains several key points:

1. Counsel’s Reliance on Judgments: The learned counsel relied on the judgment passed by the High Court of Delhi and the present Court in writ petition No. 6047/2021 M/s Devgiri Exports Vs. The Income Tax Officer, as well as the judgment passed by the Supreme Court in Whirlpool Corporation Vs. Registrar of Trade Marks Mumbai, reported in 1998 (8) SCC. The counsel argued that the assessment done under Section 144-B (of Income Tax Act, 1961), 1961 can be examined by the High Court without insisting upon filing of an appeal, especially when there is no provision for personal hearing.

2. Petitioner’s Application for Personal Hearing: The petitioner moved an application in terms of Section 144-B (of Income Tax Act, 1961) 7(vii) seeking an opportunity for personal hearing, which was denied. The learned counsel submitted that a fair opportunity had not been provided to put up their submissions and defense, and that the order went beyond the contents of the show cause notice.

3. Reference to Delhi High Court Judgment: The learned counsel also relied upon the judgment delivered by the Delhi High Court in the case of Sanjay Aggarwal Vs. National Faceless Assessment Centre, Delhi : W.P. (C) No. 5741 of 2021 decided on 2.6.2021 to submit that the provision contained under Section 144-B (of Income Tax Act, 1961) 7 (viii), where the Chief Commissioner was required to approve the request for personal hearing, is mandatory in nature, as the word “may” is interpreted to mean “shall” for the said purpose.

4. Court’s Decision: The court issued notice of the writ petition as well as the stay application, returnable by 18.10.2021. Additionally, notices may be served through e-mail. The effect and operation of the assessment order dated 17.04.2021 shall remain stayed until the next hearing scheduled for 18.10.2021.

This order reflects the court’s consideration of the petitioner’s request for a fair opportunity to present their case and the court’s decision to issue notice and stay the assessment order until the next hearing.

FAQ

Q1: What is the significance of the order issued by Hon’ble Mr. Justice Sanjeev Prakash Sharma?

A1: The order addresses the petitioner’s request for a fair opportunity to present their case in the context of an assessment done under Section 144-B (of Income Tax Act, 1961), 1961.

Q2: What is the impact of the order on the assessment order dated 17.04.2021?

A2: The effect and operation of the assessment order dated 17.04.2021 remain stayed until the next hearing scheduled for 18.10.2021.

Leaned counsel relies on the judgment passed by the High Court of Delhi and this Court in writ petition No.6047/2021 M/s Devgiri Exports Vs. The Income Tax Officer as also the judgment passed by Supreme Court in Whirlpool Corporation Vs. Registrar of Trade Marks Mumbai, reported in 1998 (8) SCC to submit that the assessment done under Section 144-B (of Income Tax Act, 1961) of Income Tax, 1961 can be examined by the High Court without insisting upon filing of an appeal which is not only cumbersome but also virtually is in the same prospective as there is no personal hearing provided.

Learned counsel submits that the petitioner moved an application in terms of Section 144-B (of Income Tax Act, 1961) 7(vii) seeking an opportunity of personal hearing which has been denied. Learned counsel submits that fair opportunity has not been provided to put up their submissions and defence and the order goes beyond the contents of the show cause notice. Learned counsel also relied upon the

judgment delivered by Delhi High Court in the case of Sanjay Aggarwal Vs. National Faceless Assessment Centre, Delhi :W.P. (C) No. 5741 of 2021 decided on 2.6.2021 to submit that the provision contained under Section 144-B (of Income Tax Act, 1961) 7 (viii) where the Chief Commissioner was required to approve the request for personal hearing is mandatory form, as the word “may” as to mean “shall” for the said purpose.

Issue notice of the writ petition as well as stay application, returnable by 18.10.2021.

Additionally, notices may be served through e-mail also.

In the meanwhile, the effect and operation of the assessment order dated 17.04.2021 shall remain stayed.

List this case on 18.10.2021.

(SANJEEV PRAKASH SHARMA),J