Case Law Details
ITO Vs Vazhakkulam Block Rural Co-Operative Society Ltd. (Kerala High Court)
Introduction: In a recent judgment, the Kerala High Court addressed the requirement of a personal hearing before the issuance of orders under Section 148A(d) of the Income Tax Act. The case, ITO Ward-2 Vs Vazhakkulam Block Rural Co-Operative Society Ltd., involved an appeal by the Revenue against a judgment passed by a learned Single Judge.
Detailed Analysis: The appeal stemmed from a writ petition filed by Vazhakkulam Block Rural Co-Operative Society Ltd., challenging an order (Ext.P5) passed by the Income Tax Officer Ward-2, Aluva, 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 2019-20.
The petitioner contended that the order was passed without affording them a personal hearing, as mandated under Section 148A(b) of the IT Act, thereby violating the principles of natural justice. The learned Single Judge concurred, quashing the order and notice, and directing the petitioner to appear for a hearing.
The appellant argued that personal hearing is not mandatory for an inquiry under Section 148A(d) of the IT Act. However, the Division Bench recently held in Income Tax Officer v. Asamannoor Service Co-operative Bank Limited that the assessee must be granted an opportunity of being heard, including the right of personal hearing.
Conclusion: The Kerala High Court upheld the judgment of the learned Single Judge, dismissing the Revenue’s appeal and affirming the necessity of a personal hearing before issuing orders under Section 148A(d) of the Income Tax Act. This decision underscores the importance of adhering to principles of natural justice in income tax proceedings and ensuring fairness in assessments. It reaffirms the rights of taxpayers to present their case and be heard before any adverse actions are taken by tax authorities.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The Revenue is in appeal before us impugning the judgment dated 29.11.2023 of a learned Single Judge in W.P.(C).No.13727 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-2, Aluva, 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 2019-20.
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 12.12.2023 with all relevant documents in its possession for being heard. It was further made clear that if the petitioner did not appear on 12.12.2023, no further opportunity needed to be granted to it by the Income Tax Officer.
5. We have heard Sri.Jose Joseph, the learned Standing Counsel for the appellant and Sri.Premjit Nagendran, 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. Jose Joseph 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 Act. 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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