Denied Personal Hearing Due to Income Tax Portal Glitch? Madras HC Quashes assessment order

In a current ruling, the Madras High Court has dismissed an income tax assessment order against R.R. International, a Tirupur-based partnership firm. The court found that the firm was not given a proper chance to present its side during the hearing. Justice Krishnan Ramasamy, who presented the ruling on April 15, 2025, said that even in online tax procedures, it is important to follow basic rules of fairness.

Background of the Case

• R.R. International had filed a writ petition raising objections against an assessment order dated March 28, 2024. The assessment order was issued by the National e-Assessment Centre in Delhi under Sections 143(3) and 144B of the Income Tax Act, 1961, for the assessment year 2022–23. The petitioner said that although they submitted timely replies to two show cause notices issued by the department on March 20 and March 24, the interface of the online portal prevented them from requesting a personal hearing due to a technical glitch.
• In reference to the petitioner, the option to ask for a hearing disappeared automatically after they uploaded their reply. Because of this, they missed a significant part of the assessment process.

Standing of Government

• The senior panel counsel for the Income Tax Department argued that the online portal clearly told taxpayers to select the video hearing option before sending their reply. Since the petitioner did not follow this step, the system closed the hearing option automatically, and the department went ahead and passed the final order.

Observations of Court

• After listening to both sides of the conversation, the court ordered that even if mistakes were made or technical problems were faced by the petitioner, it was still not right to deny them a hearing. The judge said that not giving them a chance to be heard goes against the basic rules of fairness.
• According to the court, it is essential to follow fair procedures. The court highlighted that the tax department should give taxpayers a fair chance to explain their side, especially when the outcome could affect them financially.

Directions to Court

After hearing both sides, the court has passed the following key orders:

• The Madras High Court has dismissed the assessment order dated March 28, 2024, provided, the petitioner is required to pay Rs. 10,000 to the Principal Government Naturopathy Medical College and Hospital.
• The Income Tax Department is required to reopen the portal within two weeks once the proof of payment is submitted.
• The petitioner has been given a time period of 15 days to submit their objections and documents after the portal is reactivated.
• The department must then release a 14-day advance notice for a personal hearing, and a fresh order must be issued after accepting the submission of the petitioner.