2023 (11) TMI 343 - HC - Income Tax

Validity of reopening of assessment u/s 147 - assessee argued non application of mind in granting approval u/s 151 and that is evident from the approval itself - HELD THAT - The application for approval, recommendation and the grant of approval have all been made by the officers mechanically and without application of mind. There is not even an attempt to explain in the affidavit in reply as to how this glaring error has been committed. Perhaps they had not explanation. We are of the opinion that if only the PCIT had read the form for approval carefully with the order that was prepared by the AO under Section 148A(d) of the Act, the PCIT would not have come to the conclusion that there is any material to treat it as a fit case to issue notice under Section 148 or pass order under Section 148A(d). So also the Additional/Joint Commissioner of Income-tax, who recommended that it was a fit case. It is obvious that they have not bothered to read anything. It is rather unfortunate that someone of the rank of PCIT, in the affidavit in reply, is trying to justify the glaring error. Personal hearing not being granted - As in every case, before passing an order under Section 148A(d) of the Act, Respondents shall give a personal hearing if requested for by Petitioner. That would also be beneficial to Respondent because if a Petitioner or an assessee is able to satisfy as to why it was not a fit case to pass order under Section 148A(d) of the Act and issue notice under Section 148 of the Act, the department can close the file. We should also note that we have come across many matters where personal hearing has been given and we find it rather strange that the PCIT in the affidavit in reply has taken such an unacceptable stand. We, therefore, quash and set aside the order passed under Section 148A(d) of the Act and the notice also issued under Section 148 of the Act.

Summary

Issues involved:
The issues involved in this case are the validity of a notice issued under Section 148A(b) of the Income-tax Act, 1961, the order passed under Section 148A(d) of the Act, and the subsequent notice issued under Section 148 of the Act.

Issue 1 - Approval under Section 151 of the Act:
The Petitioner challenged the approval granted under Section 151 of the Act, alleging a total non-application of mind by the Principal Commissioner of Income-Tax Officer-19. The Respondent attempted to justify the sanction, stating it was within the 3-year limit for the Assessment Year 2019-20. The court agreed with the Petitioner, noting the lack of application of mind in granting the approval.

Issue 2 - Non-application of mind in granting approval:
The court found discrepancies in the approval process, as the officers involved failed to consider the time limit for current proceedings correctly. The Additional/Joint Commissioner of Income-tax and the PCIT granted approval mechanically without proper scrutiny, leading to the erroneous issuance of the notice under Section 148A(b) of the Act.

Issue 3 - Denial of personal hearing:
The Petitioner alleged that personal hearing was denied by Respondent No. 1, citing it as premature. The court disagreed with the Respondent's argument that Section 148A(b) does not mandate a personal hearing, emphasizing that providing an opportunity to be heard implies a personal hearing. The court directed that in every case, a personal hearing must be granted before passing an order under Section 148A(d) of the Act if requested by the Petitioner.

Conclusion:
The court quashed and set aside the order dated 19th April 2023 passed under Section 148A(d) of the Act and the notice issued under Section 148 of the Act, highlighting the lack of proper application of mind and denial of personal hearing in the case. The petition was disposed of accordingly.