2024 (8) TMI 56 - HC - Income Tax

Validity of reassessment notice u/s 148A - Denial of natural justice reasonable opportunity of hearing not provided - HELD THAT - As there is no dispute regarding explanation given u/s 148 regarding information that can be relied upon by the AO to reopen assessment of escaped income. Revenue Audit Objections can be considered as a valid ground for opening assessment that has concluded. This Court is of the considered opinion that the reply of the petitioner had specifically asked for documents to be supplied including complete case proceedings and for personal hearing, which was not given. The Assessing Officer has acted in undue haste. The orders u/s 148A(d) and u/s 148 are set aside. The respondents shall provide all relevant documents that have been asked for by the petitioner in his representation by making payment of necessary fees to the department, within a period of one week from today. The petitioner shall submit his reply within one week, thereafter. A personal hearing shall be given by the AO, and an order u/s 148(d) be passed after considering the submissions made by the petitioner in his reply as also his personal hearing within three weeks, thereafter.

Issues:
- Validity of the Notice dated 27.03.2024 issued by Respondent no.3 under Section 148A(b) of the IT Act
- Validity of the Order dated 20.04.2024 passed by Respondent no.3 under Section 148A(d) of the IT Act
- Validity of the Show Cause Notice dated 20.04.2024 issued by Respondent no.2 under Section 148A(b) of the IT Act
- Direction for supplying certified copies of assessment and reassessment proceedings
- Compliance with Circulars and Guidelines for issuance of notices under Section 148 of the IT Act

Analysis:

1. Validity of Notice dated 27.03.2024 under Section 148A(b): The petitioner challenged the Notice issued by Respondent no.3 under Section 148A(b) of the IT Act. The petitioner contended that the Notice was issued without providing relevant documents and a personal hearing, violating the principles of natural justice. The Court noted that the petitioner's request for documents and a personal hearing was not considered, indicating undue haste on the part of the Assessing Officer. The Court found that the Assessing Officer had not followed the amended instructions regarding respecting the assessee's request for a personal hearing. The Court set aside the Order dated 20.04.2024 under Section 148A(d) and directed the respondents to provide the requested documents within a week and allow a personal hearing before passing a new order under Section 148(d) within three weeks.

2. Validity of Order dated 20.04.2024 under Section 148A(d): The petitioner also challenged the Order passed by Respondent no.3 under Section 148A(d) of the IT Act. The petitioner argued that the Order was issued without providing copies of Audit Objections and an opportunity for a personal hearing. The Court observed that the petitioner's right to a reasonable opportunity of hearing as per Circular dated 22.08.2022 was not respected. The Court emphasized that the Assessing Officer must provide a reasonable opportunity of hearing before issuing an Order under Section 148(d). Consequently, the Court set aside the Orders dated 20.04.2024 under Section 148A(d) and directed compliance with the Circular by providing necessary documents and conducting a personal hearing.

3. Validity of Show Cause Notice dated 20.04.2024 under Section 148A(b): The petitioner sought to challenge the Show Cause Notice issued by Respondent no.2 under Section 148A(b) of the IT Act. The petitioner alleged that the Notice was issued without following due process, including not providing relevant documents and a personal hearing. The Court found merit in the petitioner's argument regarding the lack of opportunity for a personal hearing and failure to provide relevant documents. As a result, the Court set aside the Show Cause Notice and directed the respondents to provide the requested documents and conduct a personal hearing before taking further action.

4. Direction for Supplying Certified Copies: The petitioner requested certified copies of the assessment and reassessment proceedings, which were not provided despite the application and payment of fees. The Court acknowledged the petitioner's right to access relevant documents and ordered the respondents to provide all requested documents within a week, allowing the petitioner to submit a reply within another week. This direction aimed to ensure transparency and fairness in the proceedings.

5. Compliance with Circulars and Guidelines: The Court considered the Circular issued by the Government of India regarding the issuance of notices under Section 148 of the IT Act. It emphasized the importance of respecting the assessee's request for a personal hearing and providing a reasonable opportunity for the same. The Court noted the failure of the Assessing Officer to adhere to these guidelines and directed compliance by providing necessary documents and conducting a personal hearing before making any decisions under Section 148(d).

In conclusion, the Court allowed the writ petition to the extent of setting aside the Orders dated 20.04.2024 under Section 148A(d) and Section 148, directing the respondents to provide requested documents, conduct a personal hearing, and pass a new order after considering the petitioner's submissions. The judgment highlighted the significance of following due process, respecting the assessee's rights, and ensuring a fair and transparent assessment process in line with legal provisions and circulars.

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