Case Law Details
Gurupreet Sangla Vs PCIT (Delhi High Court)
Introduction: The Delhi High Court recently dealt with two writ petitions (W.P.(C) 6061/2023 and W.P.(C) 6062/2023) concerning Assessment Year (AY) 2016-17. The issue raised in these petitions was similar to the one in another case titled “Harvinder Singh (HUF) v. Principal Commissioner of Income Tax & Anr.” (WP(C) 6045/2023).
Summary of Facts: The petitioners in W.P.(C) 6061/2023 and W.P.(C) 6062/2023 had submitted replies dated 06.06.2022 to the Assessing Officer (AO) regarding the assessment for AY 2016-17. In their responses, the petitioners had raised several defenses related to facts and the law. They also requested a personal hearing if any further clarifications were required.
However, the AO proceeded to pass the impugned orders dated 29.07.2022 and 30.07.2022 under Section 148A(d) of the Income Tax Act without granting the petitioners the opportunity for a personal hearing. Subsequently, the AO also issued notices of demand.
On 10.05.2023, the Delhi High Court took up these writ petitions and issued a notice, instructing that no precipitate action would be taken against the petitioners until the next hearing on 31.05.2023. The court also directed the revenue’s representatives to return with instructions on the matter.
Analysis: Despite the interim order issued on 10.05.2023, the AO proceeded to pass the assessment order and issued notices of demand. This action was in direct violation of the court’s instruction not to take precipitate action against the petitioners.
During the subsequent hearing, the revenue’s representatives suggested that the appropriate course of action would be to set aside the orders passed under Section 148A(d) and the consequent notices issued under Section 148 of the Income Tax Act, 1961, due to the petitioners’ grievance about not being granted a personal hearing.
Conclusion: The Delhi High Court agreed with the revenue’s representatives’ suggestion and ordered the setting aside of the orders dated 29.07.2022 and 30.07.2022 passed under Section 148A(d) of the Income Tax Act and the consequent notices of demand. The court allowed the AO to pass a fresh order under Section 148A(d) and take any necessary steps but emphasized that a personal hearing must be granted to the petitioners before doing so. The writ petitions were disposed of in these terms, and the interim order dated 10.05.2023 was vacated.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Allowed, subject to just exceptions.
W.P.(C) 6061/2023 & CM APPL. 23714/2023[Application filed on behalf of the petitioner seeking interim relief]
CM Appl.34627/2023 [Application filed on behalf of the petitioner seeking to place additional documents on record]
W.P.(C) 6062/2023 & CM APPL. 23718/2023 [Application filed on behalf of the petitioner seeking interim relief]
2. The above-captioned petitions came up for hearing before the Court on 10.05.2023, when the following order was passed:
“2. These writ petitions concern Assessment Year (AY) 2016-17.
3. We are informed that the above-captioned writ petitions are connected with WP(C) 6045/2023, titled Harvinder Singh (HUF) v. Principal Commissioner of Income Tax & Anr.
4. This writ petition, concededly, raised the same issue which is also raised in the above-captioned writ petitions.
5. Counsel for the petitioners informs us that, as in the aforementioned case, the petitioners/assessees in the above-captioned writ petitions submitted replies dated 06.06.2022, whereby several defences were taken, both with regard to facts and the law.
6. Inter alia, the petitioners/assessees had also indicated that if any further clarifications were required, they should be accorded personal hearing in the matter.
7. Apparently, no personal hearing was granted by the Assessing Officer (AO), who then proceeded to pass the impugned orders dated 29.07.2022 and 30.07.2022 under Section 148A(d) of the Act.
8. Accordingly, issue notice.
8.1 Mr Gaurav Gupta, senior standing counsel, accepts notice on behalf of the respondents/revenue in WP(C) 6061/2023, while Mr Abhishek Maratha, senior standing counsel, accepts notice on behalf of the respondents/revenue in WP(C) 6062/2023.
9. Messrs Gupta and Maratha say that they will return with instructions in the matters.
9.1 In case instructions are received to resist the above-captioned writ petitions, counter-affidavit(s) will be filed before the next date of hearing.
10. List the matters on 31.05.2023.
11. In the meanwhile, no precipitate action will be taken against the petitioners.
12. Parties will act based on the digitally signed copy of the order.”
3. As would be evident from the extract of the aforesaid order, the grievance of the petitioners was that no personal hearing had been granted to them.
4. Furthermore, we had also directed that no precipitate action would be taken against the petitioner/assessee.
5. It appears, that despite the interim order having been passed by us on 10.05.2023, the Assessing Officer (AO) not only proceeded to pass the assessment order, but also issued notice of demand.
6. Mr Gaurav Gupta and Mr Abhishek Maratha, learned senior standing counsel, who appear on behalf of the respondents/revenue in the above-captioned writ petitions, submit that in view of the grievance raised by the petitioners, the best course of action would, perhaps, be to set aside the orders dated 29.07.2022 and 30.07.2022 passed under Section 148A(d) of the Act, and the consequent notices of even date issued under Section 148 of the Income Tax Act, 1961 [in short, “Act”].
7. It is ordered accordingly.
8. Resultantly, the assessment order, which was passed pursuant to the aforementioned orders and notices will collapse.
8.1 Liberty is, however, given to the AO to pass a fresh order under Section 148A(d) of the Act and take, if necessary, consequent steps, albeit, after granting personal hearing to the petitioners/assessees.
8.2 The AO will issue notice the petitioners/assessees, indicating the date and time of the hearing.
9. The writ petitions are disposed of in the aforesaid terms.
10. Interim order dated 10.05.2023 shall stand vacated.
11. Consequently, pending applications shall stand closed.
12. Parties will act based on the digitally signed copy of the order.
