S.G. Gokani, J.

1. The petitioner is before this Court under Article 226 of the Constitution of India challenging the order passed by the respondent under Section 143(3) of the Income Tax Act, 1961 ('the Act' hereinafter) dated 21.04.2021 assessing the income of the petitioner at Rs. 107,42,69,470/- for the Assessment Year 2018-2019 on the ground that the same being an act which is bad, arbitrary, illegal and contrary to the law.

2. The facts in the capsulized form are as follow:

2.1 The petitioner is a joint venture and is in the business of the infrastructure projects mainly involved for the construction of highway.

2.2 The petitioner filed its return of income for the Assessment Year 2018-2019 on 26.07.2018 at Rs. Nil. His case was processed under Section 143(1) of the Income Tax Act, 1961 by the CPC, Bangalore and on 05.11.2019 assessed the total income at Nil.

2.3 It is averred that his case was selected for limited scrutiny to examine two issues and notices had been issued under Section 143(2) and 143(1) on 22.09.2019 and 30.01.2020 respectively. The show cause notice was as to why the addition should not be made in respect of the interest income to the tune of Rs. 35,20,89,796/- and a contract receipt amount of Rs. 72,21,79,676/- from the National Highway Authority of India ('the NHAI' for short) received during the year under consideration. According to the petitioner, these were not income but the advances contingent upon the final decision of the Delhi High Court.

2.4 According to the petitioner, in disregard to the submission as well as the decision of the Apex Court, the respondent passed the impugned assessment order adding the income as mentioned above under Section 144 (3) r/w Section 144B of the Act.

2.5 The petitioner has questioned the action of the respondent on the ground of non-observance of principle of natural justice. A letter was sent by the petitioner to the Assessing Officer on 07.04.2021 requesting for a personal hearing, however, the same was not granted without any cogent reasons and therefore, also request is made for indulgence.

2.6 The petitioner has also on the ground of hardship and irreparable loss urged to quash the impugned order since the demand raised is of Rs. 50,91,15,240/-.

2.7 According to the petitioner, the principle of alternative remedy also would not operate which is a self imposed restriction. Since the binding precedents have not been followed and the principles of natural justice also have not been observed, it is not necessary for the petitioner to exhaust the alternative remedy, but, it can challenge this illegality directly under Article 226 of the Constitution of India.

3. Prayers sought for in this petition are as follow:

"7...

(a) quash and set aside the impugned order at Annexure-'A' to this Petition;

(b) pending the admission, hearing and final disposal of this petition, to stay implementation and operation of the order at Annexure-'A' to this petition and stay recovery of tax for A.Y. 2018-19;

(c) any other and further relief deemed just and proper be granted in the interest of justice;

(d) to provide for the cost of this petition."

4. This Court issued the notice on 15.06.2021. The Court on 29.06.2021 had called for the draft order dated 04.04.2021, which had been brought on the record.

5. Affidavit-in-reply by the respondent has come from the Income Tax Officer, Ward-3(3)(1), Ahmedabad denying all averments raised in this petition. According to the respondent, if the petitioner is aggrieved by the Assessment Order, the alternative efficacious remedy is available by way of an Appeal to the CIT (Appeal) and thereafter, to the Appellate Tribunal as the statutory forum is created for redressal of the grievance, the writ petition is not to be entertained relying on the decision of the Apex Court rendered in case of CIT VS. Chhabildas Agrawal, reported in 357 ITR 357 [LQ/SC/2013/871] . It is this denied that there has been any violation of principles of natural justice.

5.1. It is specially denied that despite the specific request for a personal hearing on 07.04.2021, no personal hearing in granted. What is requested in continuation to the reply dated 06.04.2021 is that if the respondent is not satisfied with the explanation of the petitioner, then the petitioner be provided video conferencing option to discuss the issue.

5.2. It is a contention of the respondent that the opportunity of hearing through video conferencing could not be afforded to the petitioner on account of failure on the part of the petitioner to submit such request as per the guidelines for personal hearing.

5.3. The NFAC, New Delhi had issued the Standard Operating Procedure (SOP) for Assessment Unit, Verification Unit, Technical Unit and Review Unit under the Faceless Assessment Scheme, 2019 on 19.11.2020. The guidelines have been circulated through the video conferencing issued by the NFAC through e-mail dated 13.04.2021 and the steps have been described. No such request for personal hearing as per the steps as detailed in this reply have been made although, the option for personal hearing through video conferencing was activated in the work list on the date of show cause notice dated 04.4.2021. For preferring the personal hearing through video conferencing appropriate hyperlink is available in the e-filing portal every time the show cause notice is issued. Therefore, furnishing the written reply to show cause notice on 07.04.2021 without clicking on the hyperlink is insufficient to provide the facility to the petitioner. The print of the case history noting is annexed to substantiate this aspect.

5.4. It is emphasised that if at all there is nonavailability of personal hearing, it is due to the technical challenge on the part of the petitioner. The written submissions/replies dated 06.04.2021 and 08.04.2021 in response to the show cause notice have already been duly taken care of before passing the Assessment Order. After analyzing the Technical Assistance Report of the Technical Unit (TU) and Review Report from Review Unit (RU), the final Assessment Order has been passed on the basis of details submitted by the assessee and the documents available on the ITBA.

5.5. It is reiteratively emphasised that the statutory mechanism cannot be overlooked for redressal of his grievance and therefore, the Court need not entertain this.

6. Affidavit-in-rejoinder has been filed by the authorised signatory of the petitioner. According to the petitioner, the stand of the respondent is self contradictory so far as its emphasis on the guidelines for personal hearing is concerned, the CBDT Circular is dated 23.11.2020 for the video conference. The written submission is required to be furnished as per this SOP in response to the draft assessment order. The written submissions were submitted on 07.04.2021 on the part of the petitioner, and hence, the petition is in the line of SOP issued by the CBDT. There is no evidence to show the existence of any hyperlink as on 04.04.2021 nor has the respondent provided any SOP or CBDT guidelines under which the hyperlink was created and provided. The screenshot of the case history provided by the respondent shows the letter of the petitioner dated 07.04.2021, however, it does not show existence of any clickable hyperlink.

6.1. According to the petitioner, due to change in the entire ITBA Portal System and unavailability of the new system for more than a month, the petitioner was unable to access to the portal to confirm the same. There is no SOP available in the public domain including the website of Income Tax Department regarding the system of hyperlink available to be used in case of the application for the video conferencing.

6.2. According to the petitioner, the guidelines issued by NeFAC dated 13.04.2021 are issued only on 13.04.2021 whereas the request was made on 07.04.2021 and hence, the guidelines did not exist at the relevant time and secondly, these guidelines are not available in the public domain and hence, there is no way the petitioner could have known them. The website of the Income Tax Department also does not reflect these guidelines. There is nothing on the record to establish that this had been made known to everyone.

7. This Court had extensively heard the learned advocate, Mr. Bandish Soparkar and learned senior advocate, Mr. Manish Bhatt assisted by the learned senior standing counsel, Mrs. Mauna Bhatt. As the heavy reliance was placed on the guidelines issued by the NFAC circulated through email dated 13.04.2021, an order was passed on 29.09.2021 to let the Court know of the date and the authority which had issued the guidelines for personal hearing through video conferencing. Before initiating the dictation, the compliance of the order of this Court dated 29.09.2021 was inquired about and the reply to which has been given on the part of the respondent of absence of such instructions on the part of the department.

8. On the strength of the submissions made before this Court and also considering the material which has been placed on record, we at the outset make a mention that we are restricting ourselves to the aspect of availment of the opportunity of hearing to the petitioner at the time of framing the assessment in its case. It is also necessary for this Court to make a mention at this stage that the self restraint for entertaining the petition under Article 226 of the Constitution of India even when the statutory remedies are available is a well laid down principle which the Court need not emphasize at this stage. Suffice to note that there are settled position of law and this Court can surely indulge into the matter when those grounds exist, one of which is of violation of principles of natural justice.

9. As is quite apparent from the details that had been given hereinabove that the assessee a Joint Venture acted as developer and infrastructure project developer since it is involved in the construction of highway, whose case had been processed under Section 143(1) of the Income Tax Act for the Assessment Year 2018-2019 by CPC, Bangalore on 05.11.2019 on a total income of Rs. Nil. The petitioner's case has been selected for the limited scrutiny and the issues for selection were refund claim and the contract receipt on fees.

10. The notice under Section 143(2) of the IT Act was issued electronically on 22.09.2019 and served upon the Assessee on its e-mail id registered with the department and its reply was fixed on 07.10.2019.

11. The notice under Section 142(1) of the IT Act along with the questionnaire also was issued on 30.01.2020, the compliance of which was on dated 14.02.2020. Another notice under Section 142(1) of the IT Act along with the questionnaire had been issued on 11.12.2020 sent through the electronic mode for compliance on 20.12.2020 under the faceless scheme. In reply to the notice dated 11.12.2020 under Section 142(1) on 24.12.2020 the point wise reply had been given by the petitioner. On 22.02.2021 in reply to the notice under Section 142(1) of 19.02.2021 had been given. On 08.01.2020 with reference to the notice under Section 143 (2) of the respondent, the clarification on the issues of refund claim, contract receipt and fees had been made.

11.1. The show cause notice was issued as to why the assessment should not be completed as per the draft assessment order on 04.04.2021, proposing to modify the income and the sum payable which is served electronically to the petitioner. In response to the said show cause notice, the reply has been given 06.04.2021. In continuation of the reply dated 06.04.2021 further communication had been sent to the Income Tax Officer on 07.04.2021 requesting specifically that if the respondent is not satisfied with the explanation, the petitioner should be provided video conferencing option to discuss the issue. The reply mentions the continuation of reply dated 06.04.2021, the further submissions have been made on merits and on 15.04.2021 also, further reply has been tendered.

12. There is no reference in the communication dated 08.04.2021 of the letter of 07.04.2021, however, according to the petitioner. The communication dated 08.04.2021 addressed to the Income Tax Officer is a reply on merits therefore, in continuation of the earlier reply dated 06.04.2021 this had been sent electronically. As mentioned, the draft assessment order was served upon the petitioner on 04.04.2021. It is not being disputed that in continuation of the reply dated 06.04.2021, the request was made to the respondent to provide the option of the video conferencing for discussing the issue personally on 07.04.2021. However, according to the respondent, such request since had not been made as per the guidelines issued for the personal hearing by the petitioner as provided under the Faceless Assessment Scheme, 2019, such personal hearing naturally could not be given to him. He himself has not availed the opportunity and therefore, he has no one to blame to. NFAC circulated through email, the guidelines issued for personal hearing on dated 13.04.2021 in connection with the SOP. The steps mentioned are as follow:

"1. The assessee has to request for a personal hearing by clicking on the hyperlink for video conferencing VC which shall be available to him on e-filing portal against the Show Cause Notice. This hyperlink is enable only when an SCN issued to the assessee and remains active till the compliance date of SCN.

2. The video conferencing requests made by taxpayer after clicking the above link, will be available in the case History/Nothing screen in Assessment Proceedings. A link will be available to FAO in Case History/Notings against the Show Cause Notice row to schedule a VC."

13. This reiterative emphasis on the part of the respondent is of already having afforded the opportunity. There is an acquiescence by the petitioner, according to the respondent, of existence of the link which it has chosen not to avail. The proceedings have been initiated on 22.09.2019. According to the respondent, the petitioner was given an opportunity to show cause why the assessment should not be completed as per the draft assessment order. If the assessee desires to respond through the registered e-filing account, he could (a) accept the proposed modification; (b) file written reply objecting to the proposed modification and (c) if required, he may request for personal hearing so as to make oral submissions to present his case after filing of written reply. On approval of the request, personal hearing is permitted to be conducted exclusively through the video conference. It provided that if there is no response of the assessee by the given time and date, the assessment shall be finalised as per the draft assessment order.

14. According to the respondent, the petitioner had exercised option (b) and filed the reply, however, his request for personal hearing on 07.04.2021 is an afterthought. He of course had three options and yet, once having accepted the option (b) and having acted upon, he cannot insist on hearing on 07.04.2021. The opportunity was already given to him and he could not have then asked and alleged on 21.04.2021 of non availment of opportunity. There is no element of prejudice as is being sought to be made.

15. We are not in an agreement with the submissions made by the Revenue for the simple reason that the request was in continuation of the reply which had been filed by the petitioner after the final notice was issued on 04.04.2021 with the draft assessment order. Within two days, the reply came to be filed on 06.04.2021 in response to the said notice. His request for the personal hearing had come on the third day of the issuance of the notice. The Court cannot be oblivious of the fact that it was not the case where the assessment was getting time barred. The addition proposed by way of the draft amendment was substantial therefore, within three days of the issuance of the notice and within a day's time of filing of the reply, if a request is made on the part of the petitioner for personal hearing, it is not a sustainable stand of the revenue that such request having come on 07.04.2021 after having exercised the option of filing the reply, needs to be termed as an afterthought and to be brushed aside.

16. The Court is required to take into consideration the addition of Section 144B of the IT Act, which is a faceless regime under the heading of faceless assessment inserted by the Taxation and other laws (Relaxation and Amendment of Certain provisions) Act, 2020 w.e.f. 01.04.2021 where assessment under sub-section (3) of Section 143 or under Section 144 of the IT Act has been covered. In the case referred to in sub-section (2) of Section 143 now is mandatorily made in a faceless manner as per the procedure prescribed in this scheme. The scheme of the Act as it goes reflects that the National Faceless Assessment Centre is authorised to serve upon the assessee a notice under Section 144 giving him an opportunity to show cause on a date and time to be specified in the notice. Where the assessee fails to comply with the notice referred to in clause (4) or notice issued under sub-section (1) of Section 142 or with a direction issued under sub-section 2A of Section 142 as to why the assessment in his case should not be completed to the best of its judgment. The assessee shall also within the time specified in the notice is required to file the response or within such time as may be extended on the basis of an application in this regard. The Assessment Unit shall after taking into account the relevant material available on the record and make in writing as per Section 144 (1) XL the draft assessment order either accepting the income or sum payable by or sum refundable to the assessee and send a copy of such order to National Faceless Assessment Centre.

16.1. Worthwhile would it be to refer to Section 144B (1) xvi, it clearly provides for the National Faceless Assessment Centre to examine the draft assessment order. There are three options one of which is to provide an opportunity to the assessee in case of any variation prejudicial to the interest of the assessee is proposed and the same is to be done by serving a notice calling upon him to show cause as to why the proposed variation should not be made.

"144B(1)xvi: the National Faceless Assessment Centre shall examine the draft assessment order in accordance with the risk management strategy specified by the Board, including by way of an automated examination tool, whereupon it may decide to-

(a) finalise the assessment, in case no variation prejudicial to the interest of assessee is proposed, as per the draft assessment order and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee, along with the demand notice, specifying the sum payable by, or refund of any amount due to, assessee on the basis of such assessment; or

(b) provide an opportunity to the assessee, in case any variation prejudicial to the interest of assessee is proposed, by serving a notice calling upon him to show cause as to why the proposed variation should not be made; or

(c) assign the draft assessment order to a review unit in any one Regional Faceless Assessment Centre, through an automated allocation system, for conducting review of such order;

16.2. The assessee in case where a show cause notice has been served upon him as per the procedure laid down in Clause xvi of Section 144B(1) furnishes response to the National Faceless Assessment Centre on or before the scheduled date and time or within the extended time.

16.3. Clause (xxiii) provides for the National Faceless Assessment Centre to finalize the draft assessment where no response to the show cause notice is received in a case where the draft assessment order along with the final notice is proposed for making any variation, prejudicial to the interest of assessee. The draft assessment order or final draft assessment order, in case of such assessee or in any other case once finalised as per the draft assessment order, a copy needs to be served of such order and notice for initiation of the penalty proceedings to the assessee along with the demand notice. In any other case, the National Faceless Scheme Centre to send the response received from the assessee to the Assessment Unit.

"Clause xxiii: the National Faceless Assessment Centre shall (a) where no response to the show-cause notice is received as per clause (xxii),

(A) in a case where the draft assessment order or the final draft assessment order is in respect of an eligible assessee and proposes to make any variation which is prejudicial to the interest of said assessee, forward the draft assessment order or final draft assessment to such assessee; or

(B) in any other case, finalise the assessment as per the draft assessment order or the final draft assessment order and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee, alongwith the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment;

(b) in any other case, send the response received from the assessee to the assessment unit;"

16.4. For the purpose of faceless assessment, sub-section (7) of Section 144B of the IT Act would require reproduction.

"(7) For the purposes of faceless assessment-

(i) an electronic record shall be authenticated by-

(a) the National Faceless Assessment Centre by affixing its digital signature;

(b) assessee or any other person, by affixing his digital signature if he is required to furnish his return of income under digital signature, and in any other case, by affixing his digital signature or under electronic verification code in the prescribed manner;

(ii) every notice or order or any other electronic communication shall be delivered to the addressee, being the assessee, by way of-

(a) placing an authenticated copy thereof in the assessee's registered account; or

(b) sending an authenticated copy thereof to the registered email address of the assessee or his authorised representative; or

(c) uploading an authenticated copy on the assessee's Mobile App. and followed by a real time alert;

(iii) every notice or order or any other electronic communication shall be delivered to the addressee, being any other person, by sending an authenticated copy thereof to the registered email address of such person, followed by a real time alert;

(iv) the assessee shall file his response to any notice or order or any other electronic communication, through his registered account, and once an acknowledgement is sent by the National Faceless Assessment Centre containing the hash result generated upon successful submission of response, the response shall be deemed to be authenticated;

(v) the time and place of dispatch and receipt of electronic record shall be determined in accordance with the provisions of section 13 of the Information Technology Act, 2000;

(vi) a person shall not be required to appear either personally or through authorised representative in connection with any proceedings before the income-tax authority at the National Faceless Assessment Centre or Regional Faceless Assessment Centre or any unit set up under this sub-section;

(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 authorised representative, as the case may be, may request for personal hearing so as to make his oral submissions or present his case before the income tax authority in any unit;

(viii) the Chief Commissioner or the Director General, in charge of the Regional Faceless Assessment Centre, under which the concerned unit is set up, may approve the request for personal hearing referred to in clause (vii) if he is of the opinion that the request is covered by the circumstances referred to in sub-clause (h) of clause (xii);

(ix) where the request for personal hearing has been approved by the Chief Commissioner or the Director General, in charge of the Regional Faceless Assessment Centre, such hearing shall be conducted exclusively through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony, in accordance with the procedure laid down by the Board;

(x) subject to the proviso to sub-section (6), any examination or recording of the statement of the assessee or any other person (other than statement recorded in the course of survey under section 133A of the Act) shall be conducted by an income-tax authority in any unit, exclusively through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony in accordance with the procedure laid down by the Board;

(xi) the Board shall establish suitable facilities for video conferencing or video telephony including telecommunication application software which supports video conferencing or video telephony at such locations as may be necessary, so as to ensure that the assessee, or his authorised representative, or any other person is not denied the benefit of faceless assessment merely on the consideration that such assessee or his authorised representative, or any other person does not have access to video conferencing or video telephony at his end;

(xii) the Principal Chief Commissioner or the Principal Director General, in charge of the National Faceless Assessment Centre shall, with the prior approval of the Board, lay down the standards, procedures and processes for effective functioning of the National Faceless Assessment Centre, Regional Faceless Assessment Centres and the unit set up, in an automated and mechanised environment, including format, mode, procedure and processes in respect of the following, namely:-

(a) service of the notice, order or any other communication;

(b) receipt of any information or documents from the person in response to the notice, order or any other communication;

(c) issue of acknowledgment of the response furnished by the person;

(d) provision of "e-proceeding" facility including login account facility, tracking status of assessment, display of relevant details, and facility of download;

(e) accessing, verification and authentication of information and response including documents submitted during the assessment proceedings;

(f) receipt, storage and retrieval of information or documents in a centralised manner;

(g) circumstances in which proviso to sub-section (6) shall apply;

(h) circumstances in which personal hearing referred to clause (viii) shall be approved;

(i) general administration and grievance redressal mechanism in the respective Centres and units."

16.5. Clause (vii) of sub-section (7) of Section 144 A provides that where a variation is proposed in the draft assessment order or final draft assessment order or revised draft assessment order, 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 such draft or final draft or revised draft assessment order. The assessee or his authorised representative, as the case may be, may request for personal hearing so as to make his oral submissions or present his case before the income tax authority in any unit. Such request may be approved for personal hearing, if the Chief Commissioner or the Director General, In-charge of Regional Faceless Assessment Centre is of the opinion that the request is covered by the circumstances referred to in sub-clause (h) of clause (xii), where such request for personal hearing is approved, such hearing is required to be conducted exclusively through video conferencing or through video telephony including by use of any telecommunication software, which support the video conferencing or video telephony in accordance with the procedure laid down by the Court. The Board is required to establish the suitable facility for video conferencing as per clause (xii) of sub-section 7 of Section 144B or video telephony including telecommunication application software which supports the video conferencing or video telephony to ensure that the assessee or its authorised representatives or any other person is not denied the benefit of faceless assessment merely on the consideration that such assessee or its authorised representatives do not have access to the video conferencing or video telephony at a web site.

16.6. Clause (xii) of sub-section 7 of section 144 B provides for the Principal Chief Commissioner or Principal Director General, In-charge of the National Faceless Assessment Scheme Centre with the prior approval of the Board to lay down the standard procedure and process for effective functioning of the National Faceless Assessment Centres, Regional Faceless Assessment Centres and the Unit set up in an automated and mechanised environment for the various services including the service of notice, order or other communication, the receipt of an information or document, etc. One of which is important is sub-clause (h) of clause (xii) which provides for the circumstances in which the personal hearing referred to the clause (viii) needs to be approved.

16.7. Specific mention of sub-section (9) of Section 144B needs at this stage which starts with Non-obstante clause and declares that the assessment made under sub-section (3) of Section 143 or under Section 144 in the cases referred to in sub-section (2) other than sub-section (8) on or after the 1st day of April, 2021, shall be non est if such assessment is not made in accordance with the procedure laid down under the said section. Principles of natural juristic writs large in this provision and legislature's instead to avail the opportunity of hearing also is stamped all over. A very strong deterrence issued by the legislature for the revenue to adhere to the detailed requirement of this provision as otherwise the assessment would be non-est.

16.8. In this backdrop, worthwhile would be to refer to the decision of the Delhi High Court rendered in case of Sanjay Aggarwal vs. National Faceless Assessment Centre, Delhi, reported in (2021) 127 taxmann.com 637 (Delhi) where the High Court was considering the challenge to the assessment order and consequential proceedings. While interpreting the word 'may' in section 144 B(vii) according to the Delhi High Court, the provision cannot absolve the revenue from obligation cast upon it to consider the request made for grant of personal hearing. Where the revenue served a show cause notice-cum-draft assessment order on assessee proposing to vary the income disclosed by the assessee and thereafter without affording a personal hearing to the assessee when passed the assessment order the same was quashed.

16.9. The relevant paragraphs discussing this aspect deserves reproduction.

"11. Having perused the record and heard the learned counsel for the parties, in our view, what has clearly emerged is, as follows:

(i) That prior to the issuance of the how cause notice-cum-draft assessment order dated 23-4-2021, a show-cause notice-cum-draft assessment order was issued on 13-4-2021. In between these two dates, the petitioner had, on two occasions, i.e., 15-4-2021 and 20-4-2021, asked or personal hearing in the matter.

(ii) After the show cause notice-cum-draft assessment order dated 23-4-2021 was issued, via which the petitioner was invited to file his response/objections, the petitioner, once again, while filing his reply, on 24-4-2021, asked for being accorded personal hearing in the matter.

11.1 The sum and substance of the requests made, is that, both before and after the issuance of the show-cause notice-cum-draft assessment order dated 23-4-2021, the petitioner continued to press the respondent/revenue to accord him a personal hearing, before it proceeded to pass the impugned assessment order. As noticed above, according to the petitioner, the request was made as the matter was complex and therefore, required some bit of explanation.

11.2 It has also emerged that [something which is not in dispute], the respondent/revenue made proposals for varying the income, both via the show-cause notice dated 13-4-2021 as well as the show-cause notice-cum-draft assessment order dated 23-4-2021. As noticed above, the declared income was proposed to be, substantially, varied.

11.3 In this context, if one were to look at the relevant provisions, [which, or the sake of convenience are extracted hereafter], then, one would get a sense as to why the legislature has provided a personal hearing in the matter:

"144B. Faceless assessment -(1).**

(7) For the purposes of faceless assessment-

(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 authorised representative, as the case may be, may request for personal hearing so as to make his oral submissions or present his case before the income tax authority in any unit;

(viii) the Chief Commissioner or the Director General, in charge of the Regional Faceless Assessment Centre, under which the concerned unit is set up may approve the request for personal hearing referred to in clause (vi) if he is of the opinion that the request is covered by the circumstances referred to in sub-clause (h) of clause (xii);

(xii) the Principal Chief Commissioner or the Principal Director General, in charge of the National Faceless Assessment Centre shall, with the prior approval of the Board, lay down the standards, procedures and processes for effective functioning of the National Faceless Assessment Centre, Regional Faceless Assessment Centres and the unit set up, in automated and mechanised environment, including format, mode, procedure and process in respect of the following, namely:

(h) circumstances in which personal hearing referred to clause (viii) shall be approved;

11.4 A careful perusal of clause (vi) of Section 144B (7) would show that liberty has been given to the assessee, if his/her income is varied, to seek a personal hearing in the matter. Therefore, the usage of the word 'may', to our minds, cannot absolve the respondent/revenue from the obligation cast upon it, to consider the request made for grant of personal hearing. Besides under sub-clause (h) of Section 144B (7)(xi) read with Section 144B (7) (viii), the respondent/revenue has been given the power to frame standards, procedures and processes for approving the request made for according personal hearing to an assessee who makes a request qua the same.

11.5 In several matters, we have asked the counsels for the revenue as to whether any standards, procedures and processes have been framed for dealing with such requests. The response, which we have got from the standing counsels including Mr. Chandra, is hat, to the best of their knowledge, no such standards, procedures as also processes have been framed, as yet.

Conclusion:

12. Therefore, in our view, given the aforesaid facts and circumstances, it was incumbent upon the respondent/revenue to accord a personal hearing to the petitioner As noted above, several requests had been made for personal hearing by the petitioner none of which were dealt with by the respondent/revenue.

12.1 The net impact of this infraction would be that, the impugned orders will have to be set aside. It is ordered accordingly."

16.10. We entirely agree with the findings of the Delhi High Court on essential requirement of availment of opportunity of personal hearing to the assessee whereby asked for. The need to bring on the statute section 144B for faceless assessment, was essentially for the purpose of bringing transparency and accountability and also to make it easier for all concerned by employing technological advances as tools. The Court was also of the opinion that without or with such statutory scheme, the system has to be necessarily and essentially both transparent and accountable.

17. The Bombay High Court in case of M/s. Piramal Enterprises Ltd. vs. Addl. Commissioner of Income Tax, reported in (2021) 129 taxmann.com 18 (Bombay) was considering the issue of non availment of opportunity of hearing to hold that whenever the assessee requests for personal hearing so as to make the oral submissions or to represent the case, the same needs to be approved by the authorities referred to in the provision. The request is covered by sub clause (h) of clause (xii) which empowers the authorities with prior approval of the Board to lay down the standards, procedures and processes for effective functioning of National Faceless Assessment Centre. While so doing, it has relied on the decision of the Delhi High Court. The Court accordingly held the assessment order passed as unsustainable, leaving it open to the authorities to carry forward the process in accordance with Section 144B. Relevant paragraphs would need reproduction.

"47. Sum and substance of the submissions on behalf of petitioner is that personal hearing in the present matter is essential to properly appreciate the nature and manner in which the transactions are carried out and intricacies of the same can be better explained and brought forth as well as misconstruction by the authorities can be sorted out with proper understanding of the matter. In personal hearing and by oral submissions various aspects, operations/workings which could not be properly appreciated though inscribed under the responses can be resolved. In many a case, it would be possible to appreciate unrealised aspects during hearing and can be effectively explained. According to petitioner, this is precisely the reason as to why personal hearing is included.

48. Perusal of provisions of section 144B(1), would evince, National Faceless Assessment Centre (NFAC), shall serve a notice on an assessee u/s. 143(2) of IT Act and assessee may file response within a period of fifteen days to NFAC and in the events referred to in clause (iii) (a), (b) or (c), NFAC is to intimate the assessee about that assessment would be completed according to procedure u/s. 144B(1). It is an indication of intention to give prominence to the procedure under section 144B(1).

49. Under sub-section (1) of section 144B, it appears to be prescribed that upon completion of process from clauses (i) to (xiii), the Assessment Unit (AU) is supposed to make a draft assessment order (DAO), after taking into account all relevant material available on record or to the best judgment in case of the matter falling under sub-clause (xiii) wherein the AU is intimated about failure of response from the assessee.

50. Clause (xvi) of section 144B(1) would show that, NFAC on examination of DAO would decide on further course of action to be taken, viz; NFAC may finalise assessment in accord with DAO if there is no variation prejudicial to interest of the assessee is proposed as per sub clause (a) OR in case variation prejudicial to the interest of assessee is proposed, would provide opportunity to the assessee by serving a notice to show cause according to sub-clause (b) OR under sub-clause (c) decide to assign any DAO to a Review Unit (RU), whether prejudicial to interest of assessee or not.

If the matter is referred to RU, the process according to clauses (xvii) to (xx) is to take place culminating into, a final draft assessment order (FDAO) by an Assessment Unit.

51. When draft assessment order (DAO) or final draft assessment order (FDAO) is prejudicial to the interest of the assessee, it entails an opportunity to show-cause pursuant to sub-clause (b) of clause (xvi), giving option under clause (xxii) to assessee of furnishing response to NFAC.

52. Procedure as contained in clause (xxiii) is to be followed in the cases where DAO or FDAO is prejudicial to the interest of assessee after notice has been served on the assessee.

53. It would be seen that, up to clause (xxii) there is no segregation or distinction in treatment to be given to assessees bifurcating them into two categories viz, 'eligible assessee' and others' (other than eligible assessee).

54. Sub-clause (a) of clause (xxiii) prescribes courses to be adopted by NFAC in the case of non-response to show cause notice by an assessee. Clause (xxiii) purports to treat the assessees according to their categorization under sub-clause (a), items (A) or (B). Clause (xxiii), sub clause (a), item (A) prescribes, in the case DAO or FDAO proposes variation prejudicial to an eligible assessee, to forward DAO or FDAO to the eligible assessee and in the case of others, pursuant item (B) NFAC may finalize DAO or FDAO and serve a copy of assessment order on the assessee.

55. Sub-clause (b) of clause (xxiii), appears to obligate NFAC, irrespective of categorization appearing under sub-clause (a) of clause (xxiii), where response from an assessee is received, to send the same to the AU.

56. If there is response to show-cause notice, sub clause (b) of clause (xxiii) comes into operation pursuant to which matter goes to the AO and hearing assumes significance and is meaningful and the provision of sub-section (7) clause (vi) would come into play. In case of response after show-cause notice, the matter would go back to the AU and pursuant to clause (xxiv) the AU is supposed to take into account response of the assessee and then a revised DAO (RDAO) emerges for further treatment in accordance with clause (xxv).

57. It appears that under clause (xv) sub-clause (a) item (A) contemplates similar treatment to an eligible assessee as in item (A) under clause (a) of clause (xxiii) and the matter has to be forwarded to the assessee in case variations proposed in the case of eligible assessee are not prejudicial to the interest in comparison to DAO or FDAO and in case of other assessees under item (B) of sub-clause (a) of clause (xxv), similar treatment as accorded under item (B) of sub clause (a) of clause (xxiii) is given if the RDAO is not prejudicial in comparison to DAO or FDAO. However, in case of variations irrespective of whether assessee is eligible assessee or other, are prejudicial to the interest of assessee in comparison to DAO or FDAO, there is a further provision for opportunity to the assessee by serving notice, to receive treatment mutatis mutandis in accordance with clauses (xxii), (xxiv) and (xv).

58. Sub-section (7) of section 144B for the purpose of faceless assessment under clause (vii) provides that in case where variation is proposed in draft assessment order, an opportunity is to be provided to the assessee by serving a notice to show-cause and the assessee or his representative can request for personal bearing so as to make his oral submissions or to present his case before the income-tax authorities in any unit. Further sub-section (7) provides under clause (ix) for hearing through video conferencing or video telephone including use of any telecommunication application software which support video conferencing or video telephone.

59. Sub-section (7), clause (vii) stipulates as under:-

"(7) For the purpose of faceless assessment-

(i) to (vi)...

(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 authorised representative, as the case may be, may request for personal hearing so as to make his oral submissions or present his case before the income tax authority in any unit;"

60. Plainly reading aforesaid provision would show that whenever assessee requests for personal hearing so as to make oral submissions or to present case, it is before income-tax authority in any unit. Sub-section (7), clause (vii) shows that request for personal hearing is to be approved by the authorities referred to therein upon its opinion that the request is covered by sub-clause clause (xii). Clause (xii) empowers authorities with prior approval of the Board to lay down the standards, procedures and processes for effective functioning of National Faceless Assessment Centre and others, inter alia, circumstances in which personal hearing referred to in clause (vii) shall be approved.

61. Legislature is not unwary of situations arising, requiring personal hearing and oral submissions and thus, has provided for the same under the faceless assessment scheme under section 144B. It emerges that where response is given by the assessee to show-cause notice, the process under sub-section (7) would follow.

62. Learned senior counsel Mr. Pardiwala, during the course of hearing, had drawn attention to 'Standard Operating Procedure (SOP) for Assessment Unit under Faceless Assessment Scheme, 2019 under Circular F. No. PR.CCIT/SOP/2020-21 dated 19-11-2020 providing for under its clause T, that reasonable time is to be given to an assessee to comply with principles of natural justice. He had also referred to Circular F. No. PR.CCIT/NCAC/SOP/2020-21 dated 23-11-2020 to contend that personal hearing is to be allowed when there is response to DAO.

63. Principles of natural justice firmly run through fabric of section 144B of the Income-tax Act, 1961. Whenever DAO, FDAO is prejudicial to the interest of assessee or RDAO is prejudicial to the interest of assessee in comparison to DAO or FDAO, upon a response to show- cause notice, personal hearing for oral submissions or to present its case before income tax authority is strongly entwined in the provisions on a request from an assessee unless it is absurd, strategised and/or intended to protract assessment etc. It would also emerge from various decisions, referred to above, ordinarily, such a request would not be declined.

Judgments cited on behalf of petitioner referred to hereinbefore give exposition on significance and importance of principles of natural justice.

64. Section 144B of the Income-tax Act, 1961 captioned 'Faceless Assessment commences vide its sub-section (1) with a non-obstante clause and compulsively requires assessment u/ss 143(3) and 144 shall be by prescribed procedure contained in sub-section (1) of section 144B in the cases referred to in sub-section (2) thereof.

65. Sub-section (9) of section 144B declares that assessment made under section 143(3) or under section 144(4) referable to sub-section (2) other than sub-section (8) on or after 1st day of April, 2021 shall be non est if such assessment is not made in accordance with the procedure laid down under section 144B. There is a telling/pronounced rigour, to follow the procedure under section 144B, lest the assessment would be non est.

66. Going by the provisions under section 144B, when hearing has been envisioned and incorporated, it is imperative to observe principles of natural justice as stipulated. "

18. In summation, it can be deduced from the provisions, as also the decisions discussed that Section 144B of the IT Act under heading of the Faceless Assessment provides for the assessment under Section 143 (3) and 144 to be carried out as per the procedure contained in Section 144B of the IT Act. As noted above, Sub-section (9) of Section 144B of the IT Act in no uncertain term provides that after the 1st day of April, 2021, the assessment made under Section 143 (3) or under Section 144(4) of the IT Act shall be non est, when not made in accordance with the procedure detailed in Section 144B of the IT Act. The opportunity of hearing as envisaged under Section 144B of the IT Act also shall need to be scrupulously adhered to as the principles of natural justice are unfailingly ingrained in this provision.

19. Reverting to the facts on the matter on hands, it is quite clear that the notice along with the draft assessment order was given to the petitioner on 04.04.2021, the response to the same was given within two days by the petitioner in the mode as prescribed under the Law. It also filed further reply to the said notice on 08.04.2021 as well as on 15.04.2021 in continuation of the first reply of 06.04.2021. It is also a matter of record that there is no reference of the request made on 07.04.2021 in a subsequent reply made in continuity on the part of the petitioner of 08.04.2021 as well as 15.04.2021. However, that would not in any manner question his conduct of requesting for the personal hearing in as much as that aspect is neither disputed nor belied from the material which is available from the e-portal of the Income Tax Department. In fact in the affidavit-in-reply itself there is a reference of such a request made by the petitioner which according to the respondent-revenue is impermissible as he has not exercised the option while responding to the notice and the draft assessment order on 06.04.2021.

19.1. According to the revenue, on 06.04.2021 while responding to the request, there would have been a hyperlink AVAILABLE which he ought to have clicked and which he had missed out and therefore, if he makes any subsequent request for the same, the same is not sustainable.

20. We notice from the clause (xii) of sub-section (7) of Section 144B of the IT Act laying down the standards, procedures and processes for effective functioning of the National Faceless Assessment Centre, Regional Faceless Assessment Centre and the Unit set up in an automated and mechanised environment by the Principal Chief Commissioner or the Principal Director General. There is nothing on the record which insists that on the day on which the reply is given, there is any prohibition to tender the subsequent reply in continuity. It also does not anywhere prohibit making of such a request through the e-portal of the department.

20.1. Para-11 of E Assessment Scheme, 2019 notified on 12.09.2019 as modified on 13.08.2020 provides that no personal appearance in the Centre or unit would be there but request for personal hearing can be made by the assessee or his authorised representative in Faceless Assessment Scheme.

21. The FAQs of the Income Tax Department shows the process for video conferencing facility and in a question as to what is the process, it answer this wise.

"Answer: VS stands for 'video conferencing'. Using the VC facility, an assessee is enable to express or submit one's response orally before an Income Tax Authority who has initiated the proceedings and expect the response from the user. This facility has been enabled by the department as a substitute for personal appearance/hearing before an Income Tax Authority.

The facility for oral submission is in addition to submitting response in writing."

21.1. It further provides following question how to check the status of VC request raised

Answer: VC request raised by assessee will either be approved or rejected. If approved, then the department will send an email and SMS communication informing the date and time for VC along with VC URL. The VC details will be displayed in the user's e-proceeding VC Notice schedule. The login password will be shared 2 hours before the scheduled time of VC on to the registered mobile number.

If rejected, then rejection remarks and rejection letter will be displayed to the assessee in VC Notice schedule in addition to email and SMS communication. Below are the steps to check the status of VC request:

• Login to e-filing-e-Proceeding-Select Proceeding Name →

• Click VC hyperlink under the Video conferencing column. On click of VC hyperlink, the details of VC request submitted will be displayed.

21.2. According to the petitioner, there was no hyperlink for seeking the video conferencing against the notice issued by the department.

22. Having noticed that it was a time when this regime of faceless assessment had merely begun and there were many hiccups in absence of the revenue having shown that the link was created at the relevant point of time and in absence of any material on that issue, when it recognises the fact that it had received the request of 07.04.2021, there was no earthly reason for it to have ignored it and not to avail the hearing.

23. The subsequent Guidelines for personal hearing through the video conferencing recommending dos and don'ts cannot be taken into consideration by this Court for the simple reason that the authority which issued and the date from which they have come into practice is missing. Moreover, it is not even known whether this is for the internal circulation as in the public domain these Guidelines have not come, therefore, what presently would guide the case of the petitioner is the FAQs available for seeking the video conferencing and seeking the adjournment of the video conferencing, we hold that there has been a violation when the modified assessment order was to be passed by making an addition of nearly 107 Crore and when a specific request had gone on the 3rd day of issuance of notice from the petitioner and when the time for framing the assessment was not getting barred, non-availment of the opportunity of the personal hearing surely has resulted into the violation of the principle of natural justice and therefore, the indulgence would be necessary.

24. At this stage, the decision which is sought to be pressed into service by the revenue if of Dharampal Satyapal Limited vs. Deputy Commissioner of Central Excise, Gauhati and others, reported in (2015) 8 SCC 519 [LQ/SC/2015/755] where the Apex Court has held that even when there is an infraction of principle of natural justice, then, further question that needs to be addressed is as to whether the purpose would be sub-served in remitting the case to the authority to make fresh demand of amount recoverable, only after issuing notice to show cause to the appellant. As what is necessary to be considered is the principle of prejudice as well as "the useless formality theory". Relevant paragraphs would need reproduction.

"44. At the same time, it cannot be denied that as far as courts are concerned, they are empowered to consider as to whether any purpose would be served in remanding the case keeping in mind whether any prejudice is caused to the person against whom the action is taken. This was so clarified in ECIL itself in the following words:

"31. Hence, in all cases where the enquiry officer's report is not furnished to the delinquent employee in the disciplinary proceedings, the courts and tribunals should cause the copy of the report to be furnished to the aggrieved employee if he has not already secured it before coming to the court/tribunal and given the employee an opportunity to show how his or her case was prejudiced because of the non-supply of the report. If after hearing the parties, the court/tribunal comes to the conclusion that the non-supply of the report would have made no difference to the ultimate findings and the punishment given, the court/tribunal should not interfere with the order of punishment. The court/tribunal should not mechanically set aside the order of punishment on the ground that the report was not furnished as is regrettably being done at present. The courts should avoid resorting to short cuts. Since it is the courts/tribunals which will apply their judicial mind to the question and give their reasons for setting aside or not setting aside the order of punishment, (and not any internal appellate or revisional authority), there would be neither a breach of the principles of natural justice nor a denial of the reasonable opportunity. It is only if the court/tribunal finds that the furnishing of the report would have made a difference to the result in the case that it should set aside the order of punishment."
45. Keeping in view the aforesaid principles in mind, even when we find that there is an infraction of principles of natural justice, we have to address a further question as to whether any purpose would be served in remitting the case to the authority to make fresh demand of amount recoverable, only after issuing notice to show cause to the appellant. In the facts of the present case, we find that such an exercise would be totally futile having regard to the law laid down by this Court in R.C. Tobacco.

46. To recapitulate the events, the appellant was accorded certain benefits under the Notification dated 8-7-1999. This Notification stands nullified by Section 154 of the 2003 Act, which has been given retrospective effect. The legal consequence of the aforesaid statutory provision is that the amount with which the appellant was benefited under the aforesaid Notification becomes refundable. Even after the notice is issued, the appellant cannot take any plea to retain the said amount on any ground whatsoever as it is bound by the dicta in R.C. Tobacco. Likewise, even the officer who passed the order has no choice but to follow the dicta in R.C. Tobacco. It is important to note that as far as quantification of the amount is concerned, it is not disputed at all. In such a situation, issuance of notice would be an empty formality and we are of the firm opinion that the case stands covered by "useless formality theory".

47. In Escorts Farms Ltd. v. Commr., this Court, while reiterating the position that rules of natural justice are to be followed for doing substantial justice, held that, at the same time, it would be of no use if it amounts to completing a mere ritual of hearing without possibility of any change in the decision of the case on merits. It was so explained in the following terms:

"64. Right of hearing to a necessary party is a valuable right. Denial of such right is serious breach of statutory procedure prescribed and violation of rules of natural justice. In these appeals preferred by the holder of lands and some other transferees, we have found that the terms of government grant did not permit transfers of land without permission of the State as grantor. Remand of cases of a group of transferees who were not heard, would, therefore, be of no legal consequence, more so, when on this legal question all affected parties have got full opportunity of hearing before the High Court and in this appeal before this Court. Rules of natural justice are to be followed for doing substantial justice and not for completing a mere ritual of hearing without possibility of any change in the decision of the case on merits. In view of the legal position explained by us above, we, therefore, refrain from remanding these cases in exercise of our discretionary powers under Article 136 of the Constitution of India."

25. According to us, the right of hearing being a valuable right as held by the Apex Court in case of M/s. Escorts Farms (Ramgarh) Ltd.) vs. Commissioner, Kumaon Division, Nainital, U.P. & Ors. and denial of such right being a serious breach of statutory procedure prescribed as also being violation of rules of natural justice, this petition merits allowance.

26. Therefore, not only on the ground of serious prejudice for want of opportunity of hearing but also when there is a huge additions of tax by way of a draft assessment order, which eventually become the final assessment order, as framed by the respondent on 21.04.2021, this Court needs to interfere in the impugned assessment order along with interference in the consequential demand of taxes and of penalty and the same are quashed and set aside. The matter is remanded back to the Assessing Officer, who shall grant an opportunity of personal hearing to the petitioner by way of the video conferencing and thereafter pass a reasoned order in accordance with law.

27. With the above direction, present petition is allowed and disposed of accordingly.

28. Over and above the regular mode of service, direct service is also permitted through speed post as well as e-mode.