2024 (10) TMI 181 - HC - Income Tax

Validity of reopening of assessment - non granting an opportunity of hearing to the petitioner - denial of natural justice - HELD THAT - Since, the provisions of Section 148A(b) of the said Act, confers a right on the assessee to be provided with an opportunity of hearing, the jurisdictional Assessing Officer ought not to have decided the show cause notice without granting an opportunity of hearing to the petitioner. Since, the right to personal hearing is embedded in the statute itself, denial of such opportunity in my view vitiates the order passed u/s 148A(d) of the said Act dated 20th March, 2024 in respect of the assessment year 2020-21. As such on this short point upon setting aside the order passed u/s 148A(d) of the said Act, for the assessment year 2020-21, the matter is remanded back to the jurisdictional Assessing Officer. Jurisdictional Assessing Officer is directed to hear out the matter a fresh upon giving an opportunity of personal hearing to the petitioner. Needless to note all points raised herein as regards the challenge to the show cause notice are kept open for being decided by the jurisdictional Assessing Officer.

Issues:
Challenge to show cause notice under Section 148A(b) of the Income Tax Act, 1961 for the assessment year 2020-21, challenge to order under Section 148A(d) of the Act, jurisdictional Assessing Officer's authority to issue notice under Section 148, validity of notice based on transaction date, denial of opportunity of hearing to the petitioner, effect of lack of personal hearing on order validity.

The petitioner challenged a show cause notice dated 17th February, 2024, issued under Section 148A(b) of the Income Tax Act, 1961, for the assessment year 2020-21, along with an order dated 20th March, 2024, under Section 148A(d) of the Act. The challenge was based on the jurisdictional Assessing Officer's authority to issue the notice under Section 148, as per Section 151A of the Act. The petitioner contended that the notice was invalid as the transaction forming its basis occurred outside the relevant period. Additionally, it was argued that the Assessing Officer should have provided an opportunity of hearing before deciding on the show cause notice.

The respondent's advocate argued that since the petitioner did not request a personal hearing, none was granted. He further contended that the date of execution of the conveyance, which was the subject of the notice, should be part of the inquiry and not a matter for the court to decide. The court, after hearing both parties, observed that Section 148A(b) of the Act grants the assessee a right to a hearing, and the Assessing Officer erred in not providing this opportunity before deciding on the show cause notice.

The court held that the denial of a personal hearing, despite it being a statutory right, rendered the order passed under Section 148A(d) dated 20th March, 2024, invalid for the assessment year 2020-21. Consequently, the order was set aside, and the matter was remanded to the jurisdictional Assessing Officer for a fresh hearing with the petitioner. The court directed the Assessing Officer to consider all points raised in the challenge to the show cause notice.

As a result of setting aside the order under Section 148A(d), the notice issued under Section 148 for the same assessment year was also invalidated. The court did not decide on the challenge to this notice, deeming it academic in light of the previous order. The writ petition was disposed of with no costs awarded, and parties were granted access to a certified copy of the order upon request.

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