Rakesh Agrawal vs. Central Board Of Direct Taxes

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WP/16139/2024HC Madhya Pradesh04 November 2024Bench: HON'BLE SHRI JUSTICE VIVEK RUSIA4 pages
For Petitioner: Gagan TiwariFor Respondent: Veena Mandlik
AI SummaryRemanded

What did the High Court hold?

The High Court held that the petitioner was not given an effective opportunity of hearing. It was noted that the petitioner appeared on 31.03.2024 and sought an adjournment to file a detailed reply, which was filed on 05.04.2024. However, the respondent incorrectly observed that the reply was filed on 31.03.2024 and passed the final order on 05.04.2024, treating the reply as if it were filed on the earlier date. The Court found this to be a violation of the principles of natural justice. The Court also observed that an order under Section 148A(d) is not an appealable order, making a writ petition the only efficacious remedy. The Court emphasized that when the statute provides for an opportunity of hearing, it must be an effective one. The Court noted that Section 148A(b) allows for a minimum of 7 days and a maximum of 30 days for an opportunity of hearing. Since the impugned order was passed before the expiry of 30 days from the issuance of the show-cause notice, it was unsustainable. Consequently, the impugned order dated 05.04.2024 was set aside without entering into the merits of the case, and the matter was remitted back to the respondents to decide the show-cause notice afresh after providing an effective opportunity of hearing to the petitioner. The writ petition was disposed of accordingly.

What were the facts?

The petitioner, Rakesh Agrawal, an individual income tax payee, filed a writ petition challenging an order dated 05.04.2024 passed under Section 148A(d) of the Income Tax Act, 1961, and a consequential reassessment notice dated 05.04.2024 under Section 148. The petitioner received a show-cause notice under Section 148A(b) on 24.03.2024 for Assessment Year 2020-21, requiring him to appear on 31.03.2024. The petitioner appeared on 31.03.2024 and requested 15 days to file a reply. The respondent passed the final order under Section 148A(d) on 05.04.2024, and on the same date, a notice under Section 148 was issued. The petitioner argued that his reply filed on 05.04.2024 was not considered, and he was not given an effective opportunity of hearing.

What were the issues?

1. Whether the order passed under Section 148A(d) of the Income Tax Act, 1961, and the subsequent notice under Section 148 are liable to be set aside for non-compliance with the principles of natural justice, specifically the requirement of an effective opportunity of hearing as mandated by Section 148A(b)? (Question of law and fact, turning on Section 148A(b) and Section 148). Assessee's contentions: The petitioner argued that he was not granted an effective opportunity of hearing as required by Section 148A(b). He appeared on 31.03.2024 and requested 15 days to file a reply, which was filed on 05.04.2024. However, the impugned order was passed on the same date without considering his reply. The petitioner contended that the provisions of Section 148A(b) were not followed, rendering the order bad in law. Revenue's contentions: The respondents submitted that the petitioner has an alternative efficacious remedy to contest the proceedings under Section 148 before the competent authority and thereafter file an appeal. They relied on the order in Laxminarayan Patidar Vs. Income Tax Officer and Another (W.P. No. 13065 of 2022) where a writ petition was dismissed at the admission stage with liberty to avail statutory remedies.

Which sections of the Income-tax Act were involved?

Section 148A(b),Section 148A(d),Section 148

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF MADHYA PRADESH AT INDORE BEFORE HON'BLE SHRI JUSTICE VIVEK RUSIA & HON'BLE SHRI JUSTICE BINOD KUMAR DWIVEDI ON THE 4th OF NOVEMBER, 2024 WRIT PETITION No. 16139 of 2024 RAKESH AGRAWAL Versus CENTRAL BOARD OF DIRECT TAXES AND OTHERS Appearance: Shri Gagan Tiwari - Advocate for the petitioner. Shri Harsh Parashar on behalf of Veena Mandlik - Advocate for the respondents. ORDER Per: Justice Vivek Rusia The present writ petition under Article 226 of the Constitution of India has been filed challenging the order dated 05.04.2024 passed under Section 148A(d) of the Income Tax Act, 1961 and the re-assessment notice dated 05.04.2024 issued under Section 148 of the Act. 2. The brief facts of the case are that the petitioner is an individual holding PAN No. ABYPA6388C has income tax payee under the Income Tax Act, 1961. The petitioner was served with the show-cause notice dated 24.03.2024 under Section 148A(b) of the Act for the Assessment Year 2020- 21 calling upon him to furnish the details and supporting documents with respect to the queries. The petitioner was called upon to appear on 1 WP-16139-2024 NEUTRAL CITATION NO. 2024:MPHC-IND:31291 Signed by: VATAN SHRIVASTAVA Signing time: 05-11-2024 17:04:55 Signature Not Verified

31.03.2024. The petitioner appeared and submitted an application seeking 15 days time to prepare a reply and collect the necessary documents. The respondent passed the final order dated 05.04.2024 under Section 148A(d) and in consequence of it, the respondent No.3 has issued a show-cause notice under Section 148 of the Act on 05.04.2024 itself. Hence, the petitioner has approached this Court. 3. Learned counsel for the petitioner submits that the petitioner had sufficient time to file a reply within 30 days. He appeared only once on 31.03.2024 and sought 15 days time to file reply. The reply was filed on 05.04.2024 but without considering the same, the impugned order has been passed. The provisions of Section 148A(b) of the Income Tax Act has not been followed as the petitioner was not been given effective opportunity of hearing, therefore, the impugned order is bad in law and liable to be set aside. 4. Shri Harsh Parashar, learned counsel standing appearing on behalf of respondents upon instructions submits that the petitioner is having a remedy to appear before the competent authority to contest the proceedings initiated under Section 148 of the Income Tax Act. Thereafter, he will have a remedy to file an appeal before the Appellate Authority. Learned counsel for the respondent has placed reliance on an order passed by the Coordinate Bench in the matter of Laxminarayan Patidar Vs. Income Tax Officer and Another passed in W.P. No. 13065 of 2022 , whereby the writ petition has been dismissed at the admission stage itself with liberty to the petitioner to avail the statutory alternative remedy under the Income Tax Act. 2 WP-16139-2024 NEUTRAL CITATION NO. 2024:MPHC-IND:31291 Signed by: VATAN SHRIVASTAVA Signing time: 05-11-2024 17:04:55 Signature Not Verified

Heard learned counsel for the parties and perused the record. 5. It is not in dispute that the petitioner was served with the show cause notice dated 24.03.2024 with a date to appear on 31.03.2024. The petitioner appeared on 31.03.2024 and sought adjournment to file a detailed reply, but the respondent has wrongly observed that the petitioner has filed a reply on 31.03.2024. In fact the petitioner filed a reply on 05.04.2024, a copy of which is available at Page No.32 of this writ petition. On the very same date, the competent authority has passed the final order treating that the reply is filed on 31.03.2024. We are of the considered opinion that the petitioner was not given an effective opportunity of hearing to defend himself. 6. Admittedly, order passed under Section 148A(d) of the Income Tax Act is not an appealable order, therefore, except writ petition the petitioner has no other alternative efficacious remedy. Once the statute provides an opportunity of hearing before initiation of proceedings under Section 148 of the Act, then effective opportunity of hearing should be provided to the assessee. It is not the case where the time to pass final order was going to expire and the order was liable to be passed on 05.04.2024. As per Section 148A(b) of the Income Tax Act, minimum 7 days time and maximum 30 days time is liable to be given as an opportunity of hearing to the noticee. In the present case, the impugned order has been passed before expiry of 30 days from the date of issuance of show cause notice, therefore, the order is unsustainable the eyes of law. 7. In view of the the above, the impugned order dated 05.04.2024 is hereby set aside without entering into the merits of the case. The matter is 3 WP-16139-2024 NEUTRAL CITATION NO. 2024:MPHC-IND:31291 Signed by: VATAN SHRIVASTAVA Signing time: 05-11-2024 17:04:55 Signature Not Verified

(VIVEK RUSIA) JUDGE (BINOD KUMAR DWIVEDI) JUDGE remitted back to the respondents to decide the show cause notice issued under Section 148A(d) of Income Tax Act afresh after giving opportunity of hearing to the petitioner. 8. With the aforesaid observations, the writ petition stands disposed off. Vatan

4 WP-16139-2024 NEUTRAL CITATION NO. 2024:MPHC-IND:31291 Signed by: VATAN SHRIVASTAVA Signing time: 05-11-2024 17:04:55 Signature Not Verified

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