2022 (12) TMI 1017 - HC - Income Tax

Reopening of assessment u/s 147 - validity of order as passed u/s 148A - As contended by the petitioner that it was not given an opportunity of hearing as contemplated under Section 148A(b) before passing the impugned order under clause (d) of Section 148A - HELD THAT - Though the impugned order at Annexure D records that an opportunity of being heard as per provision of Section 148A(b) of Income Tax Act was provided to the assessee with a prior approval by the competitive authority, the advocate appearing for the respondents is not in a position to state whether the said opportunity was granted or not and there is no material on record to show as to an opportunity of being heard is granted to the petitioner, which is mandatory as per Section 148A(b) of the Act before passing of the impugned order under Section 148A(d) of the Income Tax Act, 1961. Under the circumstances, this is a matter which deserves to be remanded on the short question of petitioner not being given an opportunity of being heard. Hence order under Section 148A(d) and Notice u/s 148 is set aside. - Decided in favour of assessee.

Summary

Issues:
1. Opportunity of hearing under Section 148A(b) of the Income Tax Act not provided before passing the impugned order.
2. Lack of clarity on whether the opportunity of being heard was granted to the petitioner as mandated by law.
3. Remand on the grounds of petitioner not being given an opportunity of being heard.

Analysis:
The petitioner, a company providing cars on a self-drive basis, challenged a notice issued by respondent No.3 under Section 148A(a) of the Income Tax Act for re-assessment. Subsequent notices were issued under different clauses of Section 148A, leading to an order dated 07.04.2022, indicating that the petitioner's case warranted a notice under Section 148 for the assessment year 2018-2019. The petitioner contended that it was not afforded an opportunity of hearing as required by Section 148A(b) before the order was passed.

The impugned order stated that an opportunity of being heard was provided with prior approval by the competent authority. However, the petitioner's advocate highlighted the lack of clarity regarding whether this opportunity was actually granted, emphasizing the mandatory nature of such a hearing under Section 148A(b) before passing the order under Section 148A(d). Due to this ambiguity, the court deemed it necessary to remand the matter solely on the basis of the petitioner's claim of not being given a fair hearing.

Consequently, the court set aside the order dated 07.04.2022 and the accompanying notice under Section 148 of the Income Tax Act. The case was remanded to respondent No.3 for a fresh consideration after affording the petitioner a proper opportunity of hearing in accordance with the law. The petitioner was directed to appear before respondent No.3 on a specified date without further notice. As a result, the writ petition was disposed of accordingly, emphasizing the importance of procedural fairness and adherence to statutory requirements in tax assessments.