K.VISWANATH vs. DEPUTY COMMISSIONER OF INCOME TAX

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WP(C)/11456/2022HC KeralaKLHC01023602202210 November 2022Bench: HONOURABLE MR. JUSTICE GOPINATH P.6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the procedure contemplated by Section 148A of the Income Tax Act, 1961, must be complied with before an officer proceeds to the stage of issuing a notice under Section 148. The Court observed that Ext.P5 did not demonstrate that the petitioner was afforded an opportunity of personal hearing before the order was issued. It specifically referred to Section 148A(b), which indicates that an order can only be issued after providing an opportunity of hearing. Consequently, the Court quashed Ext.P5. The matter was remanded to the file of the 1st respondent (Deputy Commissioner of Income Tax), who was directed to issue fresh orders after following the procedure contemplated by Section 148A(b), including affording the petitioner an opportunity of being heard. The petitioner was directed to appear before the 1st respondent on 21.11.2022 at 11 AM. The 1st respondent was to hear the petitioner, consider the reply and any documents submitted in response to Ext.P3, and take a fresh decision within one month from 21.11.2022. The writ petition was disposed of accordingly.

What were the facts?

The petitioner, K. Viswanath, filed a writ petition before the High Court of Kerala challenging an order (Ext.P5) passed under Section 148A of the Income Tax Act, 1961. The petitioner contended that a notice (Ext.P3) was issued, to which he filed a reply (Ext.P4) and requested a personal hearing. He argued that Section 148A mandates consideration of the reply and an opportunity for hearing before proceeding to issue a notice under Section 148. The petitioner claimed this procedure was not followed, and Ext.P5 was issued without affording him a hearing. The respondent department's counsel argued that the petitioner would have a full opportunity after the notice under Section 148A and that no prejudice was caused by Ext.P5.

What were the issues?

1. Whether the order passed under Section 148A of the Income Tax Act, 1961 (Ext.P5) is liable to be quashed for non-compliance with the mandatory procedural requirement of affording an opportunity of hearing to the petitioner, as contemplated by Section 148A(b) of the Act. Assessee's Contentions: - The petitioner argued that Section 148A of the Income Tax Act, 1961, requires the assessing officer to consider the assessee's reply and provide an opportunity for a personal hearing before issuing a notice under Section 148. - The petitioner stated that Ext.P5 order was issued without affording him this mandatory opportunity of being heard, thus violating the prescribed procedure. Revenue's Contentions: - The learned Standing Counsel for the respondent department contended that the petitioner would receive a full opportunity to be heard after the notice under Section 148A is issued. - The department argued that no prejudice was caused to the petitioner by the issuance of Ext.P5, even if the prescribed procedure was not strictly followed.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. THURSDAY, THE 10TH DAY OF NOVEMBER 2022 / 19TH KARTHIKA, 1944 WP(C) NO. 11456 OF 2022 PETITIONER: K.VISWANATH AGED 64 YEARS XHOUSE NO 34/572, PADIVATTOM, ERNAKULAM, COCHIN- 682 024 BY ADV TOMSON T.EMMANUEL RESPONDENTS: 1 DEPUTY COMMISSIONER OF INCOME TAX CORPORATE CIRCLE 1 (1), CENTRAL REVENUE BUILDING, I S PRESS ROAD, COCHIN 682 018 2 PRINCIPAL COMMISSIONER OF INCOME TAX-1 INCOME TAX DEPARTMENT, CENTRAL REVENUE BUILDING, IS PRESS ROAD, COCHIN -682 018 3 THE UNION OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE), NORTH BLOCK, NEW DELHI – 110 001. REPRESENTED BY THE SECRETARY. BY ADV SHRI.B.RAMACHANDRAN, CGC OTHER PRESENT: ADV. CHRISTOPHER ABRAHAM (SC) THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 10.11.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

W.P.(C)No.11456/2022 2 JUDGMENT

Petitioner has approached this Court being aggrieved by Ext.P5 order issued under the provisions of Section 148 A of the Income Tax Act, 1961. 2. It is the case of the petitioner that pursuant to Ext.P3 notice issued to the petitioner, the petitioner had filed Ext.P4 reply and also sought for personal hearing. It is submitted that provisions of Section 148 A of the Income Tax Act, 1961 contemplates that the reply of the petitioner shall be considered and the petitioner shall be heard before the officer, decides to proceed to the step of issuing notice under Section 148 of the Income Tax Act. It is submitted that the procedure has not been complied within this case and Ext.P5 order has been issued without affording to the petitioner an opportunity of being heard. 3. The learned Standing Counsel appearing for the respondent department points out that the petitioner will get a full opportunity after the notice is issued under Section 148 A of the Income Tax Act and there is absolutely no prejudice caused to the petitioner in the issuance of Ext.P5

W.P.(C)No.11456/2022 3 order, even assuming without conceding that the same was issued without following prescribed procedure. 4. Having heard the learned counsel appearing for the petitioner and the learned Standing Counsel appearing for the respondent department and on a reading of Section 148 A of the Income Tax Act, 1961, I am of the opinion that before the officer proceeds the stage of issuance of notice under Section 148 of the Income Tax Act, he has to comply with the procedure contemplated by Section 148 A of the Income Tax Act. Ext.P5 does not show that the petitioner was afforded an opportunity of personal hearing before the order was issued. The provisions of Section 148 A(b) indicate that an order can be issued only after affording an opportunity of hearing. Therefore Ext.P5 is quashed. The matter is remanded to the file of the 1st respondent, who shall issue fresh orders after following the procedure contemplated by Section 148A(b) of the Income Tax Act and also after affording to the petitioner an opportunity of being heard. The petitioner shall appear before the 1st respondent at 11 A.M. on 21-11-2022. The 1st respondent shall thereafter hear the petitioner and take a fresh decision after considering the reply and any document

W.P.(C)No.11456/2022 4 produced by the petitioner in response to Ext.P3 notice, within a period of one month from 21-11-2022. The writ petition is disposed of as above.

Sd/- GOPINATH P. JUDGE ats

W.P.(C)No.11456/2022 5 APPENDIX OF WP(C) 11456/2022 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF TAX INVOICE NO HT/P/OCT/28/001 DATED 28-10-2017 ISSUED BY M/S. HETVI TRADING LLP, SURAT FOR INTERSTATE PURCHASE OF CUT AND POLISHED DIAMOND Exhibit P2 TRUE COPY OF INCOME TAX RETURN SUBMITTED ON 10-10-2018 BY THE PETITIONER FOR AY 2018-19 ALONG WITH STATEMENT OF INCOME TAX Exhibit P3 TRUE COPY OF NOTICE UNDER CLAUSE (B) OF SEC. 148A OF INCOME TAX ACT ISSUED BY 1ST RESPONDENT FOR AY 2018-19 Exhibit P4 TRUE COPY OF REPLY DATED 10-03-2022 SUBMITTED UNDER IN THE ONLINE ONLINE PORTAL, AGAINST EXT P3 NOTICE, WITH A REQUEST FOR PERSONAL HEARING Exhibit P4A TRUE COPY OF RELEVANT PAGE OF AUDITED TRADING PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31-03-2018 ATTACHED ALONG WITH EXT P4 REPLY Exhibit P4B TRUE COPY OF BANK STATEMENT ATTACHED ALONG WITH EXT P4 REPLY TOWARDS PAYMENT MADE BY PTGS AGAINST EXT P1 TAX INVOICE Exhibit P4C TRUE COPY OF LEDGER ACCOUNT MAINTAINED WITH THE SUPPLIER AGAINST EXT P1 PURCHASE, ATTACHED ALONG WITH EXT P4 REPLY Exhibit P4D TRUE COPY OF LEDGER ACCOUNT FOR 3% INTERSTATE PURCHASE, ATTACHED ALONG WITH EXT P4 REPLY Exhibit P5 TRUE COPY OF ORDER UNDER CLAUSE (D) OF SEC. 148A OF INCOME TAX ACT PASSED BY 1ST RESPONDENT, MECHANICALLY, WITHOUT AFFORDING PERSONAL HEARING. Exhibit P6 TRUE COPY OF DECISION REPORTED IN (2010) 320 ITR 561 PASSED BY SUPREME COURT IN COMMISSIONER OF INCOME TAX VS. KELVINATOR OF INDIA LTD, IN DISMISSING THE APPEAL FILED BY THE DEPARTMENT FOR WANT OF TANGIBLE MATERIAL

W.P.(C)No.11456/2022 6 FOR THE FORAMTION OF THE VELIEF

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