Case Law Details
Asamannoor Service Co-Operative Bank Ltd Vs ITO (Kerala High Court)
Kerala High Court held that order passed under section 148A(d) of the Income Tax Act without granting an opportunity of being heard as required u/s. 148A(b) makes the order unsustainable in law and hence is liable to be set aside.
Facts- The petitioner is a Co-operative society who provides credit facilities to its members and receive deposits from them. According to the petitioner, for the assessment year 2019-20, they did not have any taxable income under the Income Tax Act and they did not file return for the said assessment year. The Income Tax Officer has issued a notice u/s. 148A(a) of the Act to the petitioner stating that the details of the information of the enquiry conducted on which reliance has been placed along with the documents enclosed in the notice suggest that the income of the petitioner had escaped assessment and therefore, the petitioner was required to so far as vide impugned notice u/s. 148A(a) the Act should not be issued. Thereafter, notice u/s. 148(A)(b) was issued to the petitioner calling upon the petitioner to show cause why a notice u/s. 148 should not be issued.
The grievance of the petitioner is that without affording an opportunity of being heard mandated u/s. 148A(d), an order has been passed, and after obtaining sanction from the competent authority, the assessing authority issued notice u/s. 148 to the petitioner.
Conclusion- Section 148A(b) begins with “provide an opportunity of being heard to the assessee”. Hearing does not mean filing reply to the show cause notice. If the provision of this Section contemplates opportunity of being heard that has to be construed as personal hearing. Therefore, I do not find substance in the submission of learned Standing Counsel that an opportunity of being heard to the assessee contemplated under Section 148A(b) does not necessarily mean personal hearing. In my view, opportunity of being heard means an opportunity of personal hearing to the assessee.
Admittedly, no such opportunity of being heard was given to the petitioner before passing order. Therefore, the same are set aside.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The present writ petition has been filed by the petitioner questioning Ext.P5 order and Ext.P6 notice.
2. The petitioner is a Co-operative society who provides credit facilities to its members and receive deposits from them. According to the petitioner, for the assessment year 20 19-20, they did not have any taxable income under the Income Tax Act and they did not file return for the said assessment year. The Income Tax Officer has issued a notice under Section 148A(a) of the Act dated 27.0 1.2023 to the petitioner stating that the details of the information of the enquiry conducted on which reliance has beenplaced along with the documents enclosed in the notice suggest that the income of the petitioner had escaped assessment and therefore, the petitioner was required to so far as vide impugned notice in Ext.P5 notice under Section 148A(a) Income Tax Act should not be issued. The petitioner was asked to submit his reply to the notice along with the supporting documents, if any. The petitioner submitted the reply to the said show cause notice on 01.02.2023. Thereafter, notice under Section 148(A)(b) was issued to the petitioner calling upon the petitioner to show cause why a notice under Section 148 should not be issued. The petitioner was required to file reply to the said notice on or before 10.03.2023. The petitioner submitted reply to the said notice issued under Section 148(A)(b) in Ext.P4. The grievance of the petitioner is that without affording an opportunity of being heard mandated under Section 148A(d), an order dated 28.03.2023 produced as Ext.P5 has been passed, and after obtaining sanction from the competent authority, the assessing authority issued Ext.P6 notice under Section 148 to the petitioner.
3. Learned counsel for the petitioner submits that when Section 148A(b) mandates that a personal hearing and without an opportunity of being heard, the order in Ext.P5 is in violation of Section 148A(b) therefore, ExtP5 order and Ext.P6 notice under Section 148 are against the law and liable to be set aside.
4. Christopher Abraham, learned Standing Counsel for the Income Tax Department submitted that ‘being heard’ does not mean that personal hearing is to be afforded to an assessee under Section 148A(b). The manner in which the petitioner is to be heard is prescribed under Section 148 A(b). The petitioner was given an opportunity as provided under Section 148A(b) except for hearing which is not mandatory. Therefore, he submitted that this Court need not interfere with Ext.P5 impugned order and Ext.P6 impugned notice and the writ petition may be dismissed.
5. Having considered the submissions of the learned counsel for the petitioner as well as the respondent and perused the documents.
6. Heading of Section 148A itself provides conducting of enquiry, providing opportunity before issuance of notice under Section 148. Section148A(b) reads as under:
“Provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than 7 days and but not exceeding 30 days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice u/s 148 should not be issued on the basis of information which suggests that income dischargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any as per clause (a)”
7. Section 148A(b) begins with “provide an opportunity of being heard to the assessee”. Hearing does not mean filing reply to the show cause notice. If the provision of this Section contemplates opportunity of being heard that has to be construed as personal hearing. Therefore, I do not find substance in the submission of learned Standing Counsel that an opportunity of being heard to the assessee contemplated under Section 148A(b) does not necessarily mean personal hearing. In my view, opportunity of being heard means an opportunity of personal hearing to the assessee.
8. Admittedly, no such opportunity of being heard was given to the petitioner before passing Ext.P5 order and issuing Ext.P6 notice. I find Ext.P5 order and Ext.P6 notice are unsustainable. Therefore, the same are set aside. The petitioner is directed to appear before the respondent on or before 27.10.2023 with all the relevant document in his possession of being heard. After considering the submission of the assessee, the assessing officer is required to pass a fresh order, and thereafter, proceed with the matter. It is made clear that if the petitioner does not appear on 27.10.202 3, no further opportunity shall be granted to the petitioner for hearing.
With the aforesaid direction, the present writ petition stands finally disposed of.
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