Calcutta High Court Quashes NFAC Assessment Over Denial of Hearing
The Calcutta High Court has set aside an income tax assessment order by NFAC (National Faceless Assessment Centre) on grounds of denial of opportunity of hearing, despite clear directions from a coordinate bench. The Court reaffirmed the importance of natural justice in faceless assessments.
This case, cited as 2025 TAXSCAN (HC) 1432, is a vital reminder for taxpayers and consultants about procedural safeguards in NFAC proceedings.
What Happened in This Case?
- The taxpayer had already received a favourable direction from a coordinate bench of the Calcutta High Court, requiring NFAC to provide a personal hearing.
- However, NFAC proceeded to complete the assessment without granting that hearing.
- The assessee challenged this in writ, citing violation of natural justice and non-compliance with judicial orders.
Why Did the Court Intervene?
The High Court held that:
- Directions of a coordinate bench are binding on revenue authorities.
- A fresh assessment that ignores prior court orders is legally unsustainable.
- The NFAC’s action violated principles of natural justice, especially given the specific direction to allow personal hearing.
- The order was set aside and remanded for fresh assessment, with instructions to follow due procedure.
Legal Basis: Right to Be Heard in NFAC Assessments
NFAC assessments are governed by:
- Section 144B of the Income-tax Act, 1961 – mandates personal hearing via video conferencing if requested by the taxpayer.
- CBDT Guidelines – stress on transparency and fairness during faceless assessments.
- SC rulings (e.g., Magadh Sugar & Energy Ltd.) – reiterate the importance of opportunity of hearing.
This case shows that even under the faceless regime, the taxpayer’s right to be heard remains fundamental.
Key Takeaways for Taxpayers
✅ Always preserve correspondence and request for hearing clearly on the Income Tax portal.
✅ Use writ remedy if your request for hearing is ignored.
✅ Cite precedent like this Calcutta HC judgment to support your case.
✅ For ongoing NFAC cases, track compliance with judicial directions.
Expert View: How to Respond if NFAC Skips Hearing?
“If NFAC issues a final order without granting a requested hearing, immediate legal recourse via writ petition is your best remedy. Such orders are often quashed when challenged properly.”
— Tax Litigation Advisor, Efiletax
Why This Case Matters
| Aspect | Details |
|---|---|
| Forum | Calcutta High Court |
| Citation | 2025 TAXSCAN (HC) 1432 |
| Key Issue | NFAC passed order without hearing despite HC direction |
| Relief Granted | Order quashed, case remanded |
| Legal Principle Affirmed | Natural justice + binding nature of coordinate bench direction |
| Relevant Provision | Section 144B of Income-tax Act |
Frequently Asked Questions (FAQ)
Q1: Can NFAC deny hearing even if I request it?
A: No. As per Section 144B, NFAC must allow hearing via video conferencing if requested by the assessee.
Q2: What to do if NFAC ignores my request?
A: File a writ petition in High Court. Courts have consistently held in favour of assessees in such cases.
Q3: Is this judgment applicable across India?
A: While binding only in Calcutta jurisdiction, it has persuasive value for other High Courts.
Final Thoughts
This case sets a strong precedent for upholding procedural rights in faceless assessments. NFAC cannot override judicial directions or deny fundamental hearings. If you’re facing similar issues, consult Efiletax for timely legal assistance and filing support.
📩 Facing issues with NFAC notices or assessment orders?
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Summary
Calcutta HC set aside an NFAC assessment for denying hearing despite prior High Court direction. The Court ruled this violated natural justice under Section 144B. Taxpayers can cite this case to challenge similar faceless orders. Learn how to respond if NFAC skips your hearing request.