Gujarat High Court reaffirms mandatory right to personal hearing in Faceless Assessments

 Recently, the Hon’ble Gujarat High Court in B.M. Developers v. Assessment Unit of Income-tax Department ruled in favor of the taxpayer and reaffirmed that an assessment completed under the faceless assessment regime cannot disregard the taxpayer's statutory right to a personal hearing. The Hon’ble Court held that where a taxpayer specifically requests a hearing through video conferencing, the same must be granted in accordance with the prescribed procedure, failing which the assessment would be vitiated for breach of the principles of natural justice.

In the present case, the assessee was subjected to reassessment proceedings under the faceless assessment regime. Throughout the proceedings, the assessee responded to the notices issued by the tax authorities and specifically requested a personal hearing through video conferencing before the reassessment was concluded. However, the Assessing Officer proceeded to pass the reassessment order without granting the requested hearing and incorrectly recorded that the assessee had not availed the opportunity of video conferencing.

The matter thereafter travelled before the Hon’ble Gujarat High Court. The Hon’ble Court, after examining the statutory framework and the Standard Operating Procedure governing faceless assessments, ruled in favor of the assessee and made the following key observations:

• A personal hearing through video conferencing is a mandatory procedural safeguard where a taxpayer specifically requests such hearing during faceless assessment proceedings.
• Denial of the requested hearing amounts to a violation of the principles of natural justice, irrespective of the merits of the assessment.
• The tax authorities are required to strictly follow the prescribed procedure and the Standard Operating Procedure governing faceless assessments.
• An assessment order passed without complying with these mandatory procedural requirements cannot be sustained in law.
• In such cases, the appropriate course is to set aside the assessment and remand the matter to the tax authorities for fresh adjudication after following the prescribed due process.

Accordingly, the Hon’ble High Court quashed the reassessment order and remanded the matter to the Faceless Assessment Authority with directions to grant the taxpayer a personal hearing through video conferencing and complete the proceedings afresh in accordance with law.

This ruling is an important reminder that while the faceless assessment regime seeks to enhance efficiency and transparency, it cannot dilute the fundamental principles of natural justice. The Hon’ble Court has emphasized that procedural safeguards, particularly the right to a personal hearing where specifically sought by the taxpayer, are integral to a fair assessment process. The decision provides reassurance that non-compliance with such mandatory procedural requirements can render the assessment vulnerable to judicial challenge.