1996 (1) TMI 123 - HC - Income Tax

Summary

Issues: Challenge to income tax assessment orders based on undisclosed valuation instruction; Non-disclosure of crucial document affecting taxpayer's rights; Right to access relevant documents for appeal process.

In the judgment delivered by Justice K. A. Abdul Gafoor of the Kerala High Court, the petitioner contested the income tax assessment orders (exhibits P-4, P-5, and P-6) issued by the Income-tax Officer, alleging that the valuation of the building was done using an undisclosed instruction, Instruction No. 1671. The petitioner was denied access to this instruction despite requesting it, and was informed that it was not for public consumption. The petitioner argued that this undisclosed instruction was used against him to levy a higher tax rate, impacting his rights. The petitioner sought a copy of the instruction to prepare for an appeal before the Tribunal, emphasizing the necessity of the document for a fair hearing.

The court highlighted that instructions issued by the Central Board of Direct Taxes under section 119 of the Income-tax Act, 1961, are meant for public consumption as per rule 111B of the Income-tax Rules, 1962. Referring to the principle established in the case of Karunakaran v. Tahsildar, the court emphasized the importance of providing reasons for decisions affecting a citizen's rights. It stressed that if a document is used to assess a taxpayer to a higher tax rate, that document must be disclosed to the taxpayer. The court affirmed the petitioner's right to access the undisclosed instruction for a fair appeal process before the Tribunal.

While the first prayer of the petitioner became irrelevant due to an appellate order, the court granted the second prayer directing the third respondent to provide the petitioner with a copy of Instruction No. 1671 within six weeks. The judgment concluded by disposing of the original petition in favor of the petitioner, emphasizing the importance of transparency and access to relevant documents in the assessment and appeal process to uphold the rights of taxpayers.