VIRENDRA RAMANLAL SONI vs. DEPUTY COMMISSIONER OF INCOME TAX

Facts

The petitioner, Virendra Ramanlal Soni, filed a Special Civil Application seeking a direction for the Deputy Commissioner of Income Tax to pass a speaking order on his objections before issuing a final order under the Prohibition of Benami Property Transactions Act, 1988 (Benami Act). The petitioner had been issued a summons under Section 19(1)(b) of the Benami Act, to which he replied. Subsequently, a provisional attachment order was passed under Section 24(3) of the Benami Act, followed by a show cause notice under Section 24(1) issued to Yogeshkumar More, with a copy furnished to the petitioner. The petitioner filed a detailed reply to the show cause notice and later requested a separate speaking order on his objections before the final order. The assessment order under Section 143(3) read with Section 153-A of the Income Tax Act, 1961, had previously made an addition of Rs. 5,51,74,772/-.

Held

The Court held that the petitioner's claim for a separate speaking order on his objections before the final order is not supported by any provision of law under the Benami Act. The Court found that Section 24 of the Benami Act and subsequent provisions do not contain any mechanism for dealing separately with preliminary objections and passing an order before the final order. Regarding the reliance on the GKN Driveshafts judgment, the Court distinguished the present case, stating that the sphere and operation of Section 24 of the Benami Act are completely different from Section 147 of the Income Tax Act. Section 24 deals with concluding whether a property is benami, while Section 147 deals with assessing or reassessing income. The Court also noted that the petitioner's reply to the show cause notice did not contain any preliminary objections that required a separate decision; objections regarding non-supply of documents were considered merits that should be dealt with in the final order. The Court viewed the subsequent request for a speaking order as an afterthought.

Key Issues

1. Whether the petitioner is entitled to a separate speaking order disposing of his objections before the final order is passed under Section 24 of the Benami Act, by virtue of Section 24(1) of the Benami Act being pari materia with Section 147(1) read with Section 148(2) of the Income Tax Act, 1961, and the precedent set in GKN Driveshafts (India) Ltd. Vs. Income-tax Officer? Assessee's Contention: The petitioner argued that Section 24(1) of the Benami Act is pari materia with Section 147(1) read with Section 148(2) of the Income Tax Act, 1961. They relied on the Apex Court's decision in GKN Driveshafts (India) Ltd. Vs. Income-tax Officer, which held that an assessee is entitled to file objections to a notice and the Assessing Officer must dispose of them by a speaking order. The petitioner contended that the respondent was likely to pass a final order without addressing these objections. Revenue's Contention: The judgment does not record specific arguments from the revenue regarding this issue.