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2022 (12) TMI 1283 - HC - Income TaxValidity of Reopening of assessment u/s 147 - whether personal hearing a condition precedent before an order is made under Section 148 A (d)? - HELD THAT - As in the light of the Circulars which has prescribed the procedure to be followed if a request for personal hearing is made and which expressly provides for grant of personal hearing vide Clause viii of the Department circular in F.No.299/10/2022-Dir(Inv.III)/611, dated 01.08.2022 - the above Circular is binding and it may not be open to the Revenue to contend to the contrary. In view of the fact that the Circular which is binding has provided for personal hearing, we do not propose to examine Section 148 A to find if personal hearing is mandatory or otherwise. Writ Petition is allowed and it is held that personal hearing is necessary in terms of the Circular.
Issues Involved:
1. Whether an order under Section 148A(d) of the Income Tax Act, 1961 requires a personal hearing for the assessee. 2. Interpretation of the legislative intent behind the term "opportunity of being heard" in Section 148A(b) of the Income Tax Act. 3. Binding nature of departmental circulars on the issue of personal hearing. Issue-wise Detailed Analysis: 1. Requirement of Personal Hearing under Section 148A(d): The primary issue in this writ petition is whether a personal hearing is mandatory before passing an order under Section 148A(d) of the Income Tax Act, 1961. The petitioner argued that the legislative intent behind Section 148A(b) implies a personal hearing, as indicated by the phrase "opportunity of being heard." Conversely, the respondent contended that this phrase does not necessitate a personal hearing in every case. 2. Interpretation of "Opportunity of Being Heard": The petitioner relied on judgments from various High Courts, including the Calcutta High Court in Babcock Borsig Limited Vs Union of India and the Gujarat High Court in Studio Virtues Vs Income Tax Officer. Both courts emphasized that the assessing officer must consider the reply and afford a personal hearing before making an order under Section 148A(d). The Calcutta High Court stated: "the assessing officer shall consider the reply and documents and afford an opportunity of personal hearing to the appellant/writ petitioner and pass fresh orders under Section 148A(d) of the Act in accordance with law." Similarly, the Gujarat High Court noted that the Assessing Officer must provide an opportunity of being heard and consider the material produced by the petitioner before deciding to issue a notice under Section 148. 3. Binding Nature of Departmental Circulars: The petitioner further cited a Department circular (F.No.299/10/2022-Dir(Inv.III)/611, dated 01.08.2022) which clarified that if an assessee requests a personal hearing, it must be granted following the principles of natural justice. The court acknowledged the binding nature of such circulars, referencing multiple Supreme Court judgments, including State Bank of Travancore v. Commissioner of Income-tax and Paper Products Ltd. v. Commissioner Of Central Excise. These judgments established that circulars issued by the Department are binding on the authorities and must be followed unless withdrawn. Conclusion: The court concluded that personal hearing is necessary in terms of the binding Department circular. The writ petition was allowed, and it was held that personal hearing must be granted if requested by the assessee. The court did not delve into whether personal hearing is inherently mandatory under Section 148A, given the clear directive of the binding circular. Consequently, the impugned order and notice were set aside, and the matter was remitted back to the respondent-Authority to proceed in accordance with the law, ensuring a personal hearing is provided. There were no orders as to costs, and connected miscellaneous petitions were closed.
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