Rafia Fatima (Died) vs. Additional Commissioner of Income Tax,

IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD

THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR

WRIT PETITION Nos. 4562, 4640, 4648, 4652, 4673 and 4675 OF 2012

DATE: 23.01.2014

W.P.No.4562 of 2012 Between:

Syed Irfanuddin … Petitioner

And

Additional Commissioner of Income Tax, Hyderabad & others. … Respondents.

This Court made the following:

THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR

WRIT PETITION Nos.4562, 4640, 4648, 4652, 4673 and 4675 of 2012

COMMON ORDER: (Per the Hon’ble The Chief Justice Sri Kalyan Jyoti Sengupta)

This batch of matters is taken up for hearing analogously, as in all those matters the facts and issues, both on law and fact, are identical.

The petitioners herein challenged the communication dated 27.12.2011, whereby the Additional Commissioner of Income Tax-VI, Hyderabad, being the 1st respondent, has informed the petitioners that the accounts for the assessment years 2007-08, 2008-09, 2009-10 and 2010-11 are required to be audited especially under Section 142(2A) of the Income Tax Act, 1961 (hereinafter referred to “the Act”). The language conveyed by this communication is identical in each and every matter, which is reproduced hereunder.

“You are hereby directed to get your accounts for the assessment years 2007-08, 2008-09, 2009-10 and 2010-11 audited u/s. 142(2A) of the I.T. Act by M/s. Jawahar & Associates, C-5, Skylark Apartments, Basheerbagh, Hyderabad – 500 029.

The order is issued with prior approval of the Commissioner of Income Tax-VI, Hyderabad.”

It appears that the respondent authorities wanted to reopen the assessment under Section 148 of the Act and in connection therewith the aforesaid communication was made. Before this communication was made, on 16.12.2011 a notice was issued to show cause as to why the account should not be audited specially under Section 142(2A) of the Act. On receipt of the said notice, the petitioners replied to the same and asked for personal

hearing in the matter. In each and every reply the aforesaid action was sought to be projected. It is stated in the writ petitions that without giving any personal hearing to any of the petitioners, the aforesaid communication was made, which is again a non-speaking one. Learned counsel for the petitioners drew our attention to the proviso of Section 142(2A) of the Act and contends that reasonable opportunity of being heard means whenever a person wants a personal hearing, he should be heard and further reasons have to be assigned in the final order after considering the objections. According to him, the aforesaid proviso has been engrafted in the statute recognizing and accepting the principle of natural justice in all senses.

Learned counsel for the Revenue, on the other hand, says that a notice was issued before taking a final decision and on receipt of the objections and considering the same the impugned communication was passed. According to him, no personal hearing is required to be given, as giving an opportunity of putting forth an objection is good enough for this purpose. He further argues that recording of reasons is not required, as it is implicit in the communication that the objections raised by the petitioners are deemed to have been overruled. In this case, the only question that arises is whether the respondent authorities have followed the very object of the aforesaid proviso. We accordingly reproduce the aforesaid proviso as under. “142(2A) - If, at any stage of the proceedings before him, the Assessing Officer, having regard to the nature and complexity of the accounts of the assessee and the interests of the revenue, is of the opinion that it is necessary so to do, he may, with the previous approval of the Chief Commissioner or Commissioner, direct the assessee to get the accounts audited by an accountant, as defined in the explanation below sub-section (2) of Section 288, nominated by the Chief Commissioner or Commissioner in this behalf and to furnish a report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed and such other particulars as the Assessing Officer may require:

Provided that the Assessing Officer shall not direct the assessee to get the accountants so audited unless the assessee has

been given a reasonable opportunity of being heard.”

We feel that the learned counsel for the petitioners is right in saying that the aforesaid provision in the statute is to confirm the principle of natural justice, for when any audit report furnished to the returns is discarded, obviously the assessee has right to be informed as to why it has been discarded and more so why the fresh audit has to be done incurring further expenses. Here, the petitioners raised objection to the aforesaid proposed action and asked for personal hearing. We think that in a case of this nature the compliance of natural justice would be done giving personal hearing. In a personal hearing, the respondent authorities could attract the mind better way across the table the applicability and non-applicability of law for oral representation. According to us, this is primary object of giving a personal hearing. When a party wants to be heard in-person, he should not be denied when the statute provides for opportunity of being heard which includes not only putting objection, but also to advance oral representation. We are unable to accept the contention of the learned counsel for the respondents, and accept the contention of the learned counsel for the petitioners that in this case personal hearing is required. We therefore set aside the impugned communication and direct the 1st respondent to hear the petitioners each of them by fixing the dates. On the date of hearing, if any of the petitioners does not turn up in spite of receipt of notice, then this order will stand recalled as far as the non-appearing petitioner is concerned. In the event appearance is made, after hearing, the 1st respondent shall pass a speaking order. This entire exercise shall be completed within a period of four weeks from the date of communication of this order. Accordingly, all the writ petitions are allowed. No costs. Pending miscellaneous petitions, if any, shall stand closed.

___________________ K.J. SENGUPTA, CJ

___________________ SANJAY KUMAR, J

Date: 23.01.2014 ES