GURUPREET SANGLA vs. PRINCIPAL COMMISSIONER OF INCOME TAX, & ANR.

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W.P.(C)/6061/2023HC DelhiDLHC01017386202311 July 2023Bench: HON'BLE MR. JUSTICE RAJIV SHAKDHER,HON'BLE MR. JUSTICE GIRISH KATHPALIA4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the orders passed by the Assessing Officer (AO) under Section 148A(d) of the Income Tax Act, 1961, dated July 29, 2022, and July 30, 2022, along with the consequent notices issued under Section 148 of the Act, were to be set aside. This decision was based on the conceded grievance of the petitioners that they were not granted a personal hearing, which is a crucial aspect of the procedure under Section 148A. The Court reasoned that the failure to provide a personal hearing, especially when requested, violates principles of natural justice and renders the proceedings flawed. Consequently, the assessment order passed pursuant to these flawed orders would also collapse. Liberty was granted to the AO to pass a fresh order under Section 148A(d) after granting a personal hearing to the petitioners, and to take necessary consequent steps thereafter. The interim order dated May 10, 2023, was vacated, and pending applications were closed.

What were the facts?

The petitioners, Gurupreet Sangla and Seema Sangla, filed writ petitions challenging orders passed under Section 148A(d) of the Income Tax Act, 1961, for Assessment Year 2016-17. The core grievance was the denial of a personal hearing by the Assessing Officer (AO) before passing the impugned orders dated July 29, 2022, and July 30, 2022. The Court had previously issued an interim order on May 10, 2023, directing that no precipitate action be taken. Despite this, the AO proceeded to pass assessment orders and issue demand notices. The revenue, represented by senior standing counsel, suggested setting aside the Section 148A(d) orders and consequent notices as a course of action.

What were the issues?

1. Whether the impugned orders passed under Section 148A(d) of the Income Tax Act, 1961, are liable to be set aside on the ground that the petitioners/assessees were not granted a personal hearing, as mandated by principles of natural justice and the procedure contemplated under the said section? Assessee's Contention: The petitioners argued that the denial of a personal hearing by the Assessing Officer, despite their request for it in their replies dated June 6, 2022, violated principles of natural justice and the procedural requirements of Section 148A(d). They contended that this procedural lapse vitiated the subsequent orders. Revenue's Contention: The revenue, through its senior standing counsel, conceded that in view of the grievance raised by the petitioners regarding the lack of personal hearing, the best 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 Act.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

W.P.(C) 6061/2023
W.P.(C) 6062/2023

Read from the judgment's own cause title. This page is filed under one of them.

W.P.(C) 6061/2023 & connected matter Page 1 of 4

$~21 & 22 * IN THE HIGH COURT OF DELHI AT NEW DELHI %

Date of Decision: 11.07.2023 + W.P.(C) 6061/2023

GURUPREET SANGLA

..... Petitioner Through: Mr V K Sabharwal with Mr Rajesh Babu Gupta, Advs.

versus

PRINCIPAL COMMISSIONER OF INCOME TAX, & ANR.

..... Respondents Through: Mr Gaurav Gupta, Sr. Standing Counsel with Mr Shivendra Singh and Mr Puneett Singhal, Standing Counsel. + W.P.(C) 6062/2023

SEEMA SANGLA

..... Petitioner Through: Mr V K Sabharwal with Mr Rajesh Babu Gupta, Advs.

versus

PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI 10 & ANR.

..... Respondents Through: Mr Abhishek Maratha, Sr Standing Counsel with Mr Akshat Singh, Standing Counsel.

CORAM:

HON'BLE MR. JUSTICE RAJIV SHAKDHER

HON'BLE MR. JUSTICE GIRISH KATHPALIA

O R D E R %

11.07.2023 [Physical Hearing/Hybrid Hearing (as per request)] CM Appl.34658/2023 in W.P.(C) 6061/2023 1. Allowed, subject to just exceptions. Digitally Signed By:TARUN RANA Signing Date:17.07.2023 11:48:03 Signature Not Verified

W.P.(C) 6061/2023 & connected matter Page 2 of 4

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. Digitally Signed By:TARUN RANA Signing Date:17.07.2023 11:48:03 Signature Not Verified

W.P.(C) 6061/2023 & connected matter Page 3 of 4

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. Digitally Signed By:TARUN RANA Signing Date:17.07.2023 11:48:03 Signature Not Verified

W.P.(C) 6061/2023 & connected matter Page 4 of 4

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.

RAJIV SHAKDHER, J

GIRISH KATHPALIA, J

JULY 11, 2023/pmc Digitally Signed By:TARUN RANA Signing Date:17.07.2023 11:48:03 Signature Not Verified

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