2015 (2) TMI 1383 - HC - Income Tax

Reopening of assessment u/s 147 - Objections against assessment proceedings - petitioner has been denied an opportunity of fair hearing by providing copy of the statement and related details - HELD THAT - It is apparent that without furnishing a copy of the statement stated to have been given by Mukesh Choksi and without notifying the petitioner regarding basis of the transaction that petitioner is said to have entered into with Mukesh Choksi respondent has passed the impugned order. The entire basis for the impugned order is the sworn statement of Mukesh Choksi. Unless petitioner is given opportunity to have his say in the mater with regard to the said statement and its contents it cannot be said that petitioner was given an opportunity of being heard in the matter. Hence it has to be held that the impugned order is passed without providing any fair and reasonable opportunity of being heard to the petitioner. Petitioner places reliance on the judgment of the Division Bench of the Delhi High Court in the case of Mr. Ashok Mittal 2014 (4) TMI 208 - DELHI HIGH COURT wherein also petitioner therein had specifically objected for the assessment proceedings stating that he had no transaction with either Mukesh Choksi or any other related companies but the Assessing Officer had solely proceeded on the basis of the statement and the list provided without there being any other information or details furnished to the petitioner though petitioner therein had sought for such details. The High Court of Delhi has held that there was absence of fair and reasonable opportunity and such an assessment order could not be sustained and could be interfered with under Article 226 of the Constitution of India. In the light of the facts and circumstances as adverted to above and as the petitioner has been denied an opportunity of fair hearing by providing copy of the statement and related details regarding the alleged share amount I am of the view that the matter requires to be re-considered by the respondent by providing fair and reasonable opportunity of hearing to the petitioner and by furnishing the details/copy of the statement based on which the impugned assessment order has been passed.

Summary

Issues:
1. Challenge to assessment order passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961 for the assessment year 2007-08.
2. Request for copy of sworn statement made by third party, Mukesh Choksi, forming the basis for re-opening assessment.
3. Lack of opportunity for petitioner to respond to allegations based on the sworn statement.
4. Comparison with a similar case where the High Court held absence of fair opportunity renders assessment order unsustainable.

Analysis:
1. The petitioner challenged the assessment order dated 30.06.2014 passed by the Income Tax Officer under Section 143(3) read with Section 147 of the Income Tax Act, 1961 for the assessment year 2007-08. The order added a sum of Rs.6,34,705 to the petitioner's income, allegedly pertaining to shares purchased using income that had escaped assessment. The petitioner contended that the assessment was based on a statement made by Mukesh Choksi, a third party, without providing a copy of the statement or specific allegations against the petitioner.

2. The petitioner requested a copy of the sworn statement made by Mukesh Choksi, upon which the assessment proceedings were re-opened. Despite objections raised by the petitioner regarding the lack of details and specific allegations against him in the statement, the respondent proceeded with the assessment. The petitioner argued that without being informed of the basis for the transaction with Mukesh Choksi, he was denied a fair opportunity to respond to the allegations.

3. The petitioner's counsel highlighted a judgment from the Delhi High Court where a similar situation arose, and the court held that the absence of a fair and reasonable opportunity for the assessee to respond rendered the assessment order unsustainable under Article 226 of the Constitution of India. The court emphasized the importance of providing the assessee with relevant details and copies of statements forming the basis of the assessment.

4. Considering the lack of opportunity for the petitioner to respond to the allegations based on the statement of Mukesh Choksi and the failure to provide necessary details, the High Court held that the assessment order was passed without affording a fair hearing to the petitioner. Consequently, the court allowed the writ petition, quashed the impugned order, and remitted the matter for fresh consideration by the respondent, emphasizing the need for a fair and reasonable opportunity of hearing for the petitioner.