Case Law Details
ITO Vs Mohammed Noushad (Kerala High Court)
Introduction: In a recent judgment, the Kerala High Court addressed the necessity of a personal hearing prior to passing an order under Section 148A(d) of the Income Tax Act. The case, ITO Vs Mohammed Noushad, involved an appeal by the Revenue challenging a judgment passed by a learned Single Judge.
Detailed Analysis: The appeal arose from a writ petition filed by Mohammed Noushad, contesting an order (Ext.P5) passed by the Income Tax Officer Ward-1, Kalpetta, under Section 148A(d) of the Income Tax Act, and the consequential notice (Ext.P6) proposing a re-assessment of income for the assessment year 2016-17.
The crux of the petitioner’s challenge was the absence of a personal hearing before the issuance of Ext.P5 order. The learned Single Judge concurred, ruling that Section 148A of the IT Act mandates providing an opportunity of being heard to the assessee, and failure to do so vitiates the impugned orders and consequential notices.
The appellant, however, argued that a personal hearing is not mandatory for an inquiry under Section 148A(b) of the IT Act. The Division Bench, in a recent judgment (Income Tax Officer v. Asamannoor Service Co-operative Bank Limited), held that the opportunity of being heard under Section 148A must include the right of personal hearing. This precedent applied to the present case.
Conclusion: The Kerala High Court upheld the judgment of the learned Single Judge, ruling that personal hearing is mandatory before passing an order under Section 148A(d) of the Income Tax Act. The dismissal of the appeal highlights the significance of affording taxpayers an opportunity to present their case and be heard before any adverse actions are taken. This decision reinforces the principles of natural justice and ensures fairness in income tax proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The Revenue is in appeal before us impugning the judgment dated 09.01.2024 of a learned Single Judge in W.P.(C).No.13318 of 2023. Since a detailed narration of the facts of the petitioner’s case in the writ petition is given in the impugned judgment, we choose not to reiterate those in this judgment since the appeal of the Revenue lies in a very narrow compass.
2. In the writ petition, the challenge of the writ petitioner was to Ext.P5 order passed by the Income Tax Officer Ward-1, Kalpetta, in terms of Section 148A(d) of the Income Tax Act [hereinafter referred to as the ‘IT Act’] and the consequential notice [Ext.P6] issued to the writ petitioner by the said Officer under Section 148 of the IT Act proposing a re-assessment of the income for the assessment year 2016-17.
3. The grievance of the writ petitioner was that the appellant herein proceeded to pass Ext.P5 order without affording the petitioner an opportunity of being heard as mandated under Section 148A(b) of the IT Act. It was therefore contended that P5 order was vitiated on account of the non-compliance with the rules of natural justice, and consequently, Ext.P6 notice too was vitiated in law.
4. The learned Single Judge found that inasmuch as Section 148A of the IT Act contemplated the provision of an opportunity of being heard to the assessee, the non-providing of a personal hearing to the assessee vitiated the impugned orders and consequential notices. The said order and notice were therefore quashed, and the writ petitioner was directed to appear before the appellant herein on or before 15.01.2024 with all relevant documents in its possession for being heard. It was further made clear that if the petitioner did not appear on 15.01.2024, no further opportunity needed to be granted to it by the Income Tax
5. We have heard Sri. P. G. Jayashankar, the learned Standing Counsel for the appellant and Sri. V. P. Narayanan, the learned counsel for the respondent/writ petitioner.
6. The appellant is aggrieved only to the limited extent wherein the learned Single Judge held that personal hearing is mandatory in an enquiry under Section 148A(b) of the IT Act. The learned standing counsel for the appellant Sri. P. G. Jayasankar submitted that considering the nature of the proceedings, the scheme of the statute and the language of the provisions, the assessee is not required to be given an opportunity of personal hearing before passing an order under Section 148A(d) of the IT The question whether affording a personal hearing to the assessee is mandatory in an enquiry under Section 148A(b) of the IT Act came up for consideration recently before the Division Bench of this Court in Income Tax Officer v. Asamannoor Service Co-operative Bank Limited (2024 KHC OnLine 28). It was held that Section 148A of the IT Act contemplates that the assessee should be granted an opportunity of being heard and that opportunity must include the right of personal hearing as well. The dictum laid down in the said judgment squarely applies to the facts of this case. Hence, we find no merit in the appeal. We accordingly dismiss the Writ Appeal as devoid of merit.
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