Case Law Details
Nitin Agarwal Vs ITO (Calcutta High Court)
Summary: The Calcutta High Court allowed an intra-court appeal filed by the assessee challenging the order dated 8.6.2023 in WPO/1096/2023 concerning reassessment proceedings for assessment year 2019-20 under Section 148A(d) of the Income Tax Act, 1961. The assessee contended that the order dated 13.4.2023 passed by the Assessing Officer was in violation of the principles of natural justice because no opportunity of personal hearing had been granted before reopening the assessment.
The Court examined the notice dated 27.3.2023 issued under Section 148A(b) and observed that although the notice called upon the assessee to furnish a reply along with supporting documents, it was not a notice granting personal hearing. The assessee had filed a reply dated 31.3.2023 denying the allegations and seeking copies of documents, information, enquiry reports, and credential information relied upon by the department. The assessee also reserved the right to file further objections after receipt of those materials.
Subsequently, another notice under Section 148A(b) was issued enclosing certain information. The assessee replied on 12.4.2023 contending that the documents supplied by the department did not establish any bogus purchases or escapement of income. The assessee submitted that party ledgers, account confirmations, signed bills, and purchase registers had already been furnished. It was also argued that failure of another entity to respond to summons could not lead to an inference that the assessee’s purchases were bogus. The assessee again requested relevant documents and liberty to file additional objections.
The High Court observed that the reply dated 12.4.2023 had not been properly considered by the Assessing Officer even though reference to the reply appeared in the impugned order. The Court reiterated that the notice dated 27.3.2023 was not a notice of personal hearing and held that the authority had violated the principles of natural justice. The Court further observed that the statute itself required an opportunity to be granted to the assessee before reopening assessment proceedings.
Accordingly, the Court directed that the impugned order dated 13.4.2023 under Section 148A(d) be treated as a notice under Section 148A(b). The assessee was granted liberty to file further objections along with supporting documents within 30 days from receipt of the server copy of the order. The Assessing Officer was directed to fix a date for personal hearing, hear the authorised representative of the assessee, and thereafter pass a fresh order on merits and in accordance with law. The Court also permitted the assessee to seek additional documents relied upon by the department during the course of personal hearing. The appeal was accordingly allowed.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
The Court : – This intra-court appeal filed by the writ petitioner is directed against the order dated 8.6.2023 in WPO/1096/2023. In the said writ petition, the appellant had challenged the order passed by the assessing officer dated 13.4.2023 under Section 148A(d) of the Income Tax Act, 1961 (the Act) relating to the assessment year 2019-20. The principal ground on which the order was challenged is by contending that it has been passed by violation of principles of natural justice inasmuch as the appellant has not been granted an opportunity of personal hearing.
On perusal of the order dated 13.4.2023 passed under Section 148A(d) of the Act, it is seen that the assessing officer has stated that an opportunity of being heard as per Section 148A(b) of the Act was provided to the assessee along with a copy of information and material relied upon by notice dated 27.3.23. This notice called upon the assessee to furnish a reply along with supportive documents on the allegation set out in the annexure to the notice and we find that the notice is not a notice of personal hearing. The assessee responded to the said notice and submitted their reply dated 31.3.23, apart from denying the allegation made against them. They requested to furnish those documents, information, enquiry and/or credential information which has been relied on by the department and reserved their right to make further objection as soon as the documents are supplied to them. Thereafter, another notice was issued under Section 148A(b) of the Act enclosing certain information. It is pointed out by the learned Advocate for the appellant that in the information only in one place the name of the assessee figures stating as per the GST data the parties have taken accommodation entry from the assessee. The assessee responded to the said notice by submitting a reply on 12.4.23 contending that as per the record of the department M/s. Agnibhoo Sales Pvt. Ltd. failed to reply to the summons issued on 7.2.23 and this Court can never imply that they have denied or disputed the purchases effected by the assessee. Assessee further stated that in the absence of any such denial, the purchases made are admitted facts and the assessee has already provided party ledger, account confirmation bill signed by Agnibhoo Sales Pvt. Ltd. and purchase register. Therefore, it is contended that by speculation it cannot be said that the purchases made by the assessee are bogus or fake. Further the assessee stated that the document provided by the department are neither relevant nor does it indicate any bogus purchases made by them and in the document there is no whisper about the assessee that any income has escaped assessment.
Once again, the assessee sought for the relevant documents and liberty to file an additional objection. The reply given by the assessee on 12.4.23 has not been taken into account in the manner it should have been done, though the assessing officer refers to the said reply in pages 3 and 4 of the order dated 13.4.23. As pointed out earlier, the notice dated 27.3.23 is not a notice of personal hearing. Therefore, the authority while passing the order impugned in the writ petition has violated the principles of natural justice and inasmuch as the statute also provided that opportunity be granted to the assessee before an assessment is reopened. Therefore, we are satisfied that there has been violation of principles of natural justice and, therefore, the assessee has to be provided an opportunity of personal hearing and also be given liberty to furnish additional documents to support their stand. For the above reasons, the order impugned in the writ petition dated 13.4.23 passed under section 148A(d) of the Act is directed to be treated as a notice under Section 148A(b) of the Act and assessee be directed to file further objection along with supportive documents and on receipt of the further objection and supportive documents, the assessing officer is directed to fix a date for personal hearing to hear the authorized representative of the assessee and pass fresh orders on merits and in accordance with law. The assessee is directed to file their reply within a period of 30 (thirty) days from the date of receipt of the server copy of this order.
During the course of personal hearing, the petitioner may make a request for supply of any additional document that may be relied upon by the department.
The appeal is allowed with the above observations.
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