Allahabad High Court: In a plea filed by petitioner challenging the order dated 20-04-2024 (‘impugned order’) under Section 148-A(d) of the Income Tax Act, 1961 (‘the Act’) passed by the Assessment Officer, alleging that relevant documents of the proceedings and an opportunity of personal hearing before the Assessing Officer had not been granted, the Division Bench of Sangeeta Chandra and Prakash Singh, JJ., partially allowing the writ said that the Assessment Officer had acted with undue haste by not granting the petitioner the opportunity of being heard, and said that Revenue Audit Objections was a valid ground for reopening assessment that had concluded, under Section 148 of the Act.
Background
The petitioner and his brother conducted separate businesses entailing trading of jewellery from a shop at Lucknow. Subsequently, the petitioner and his brother acquired another shop in Lucknow for expansion of their respective businesses and shifted to the new premises.
The respondents initiated search and seizure as per Section 132 of the Act at the joint shop of the petitioner, during which cash, gold jewellery and silver jewellery were found along with loose documents and sheets. The loose documents and sheets were impounded, but the gold and silver were considered stock in trade, and therefore, were not seized.
The petitioner’s case was taken up and a questionnaire was issued to him under Section 142(1) of the Act, which sought explanations for the unaccounted cash, jewellery and loose documents.
On 31-01-2021, the petitioner filed his return of income declaring a total income of Rs. 16,65,590/- only, to which the Assessing Officer issued notice under Section 142(1) of the Act to the petitioner asking him to produce relevant documents and accounts in support of the returns filed by him.
The petitioner filed his reply to the notice. Thereafter, the Assessing Officer passed an order under Section 143(3) of the IT Act wherein certain additions were made to the income that had been declared by the petitioner on the basis of the unexplained cash and on account of excess stock which had not been recorded in the books of accounts.
The petitioner preferred an appeal before the Commissioner of Income Tax against the Assessment Order dated 02-09-2021. During the pendency of the appeal, an objection was raised by the Revenue Audit against the Assessment Order alleging that assessment had not been carried out as per the mandate of the Act and that there was violation of Section 69(A) under the Act.
The petitioner also submitted a Circular issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Direct Taxes on 22-08-2022 (‘the circular’) regarding uploading of data on functionalities/portal of the Income Tax Department and Guidelines for issuance of notice under Section 148 of the Income Tax Act.
The respondents issued a notice based on the Audit Objections under Section 148-A(b) of the Act on 27-03-2024, to which the petitioner gave detailed reply, asking for copies of Audit Objections and other relevant documents, and further praying for grant of a personal hearing.
However, the impugned order was passed by the respondent on 24-02-2024 under Section 148-A(d) of the Act rejecting the reply of the petitioner. Further, the petitioner was neither provided with copies of the Audit Objections, neither was he granted a personal hearing. A notice under Section 148 of the Act has also been issued on the same date i.e. 24-02-2024, proposing reassessment of income. On 06-05-2024, the petitioner again applied for certified copies of the record of assessment proceedings as well as reassessment proceedings.
Decision and Analysis
Upon hearing the parties, the Court did not make any observations with regard to the merits of the case as put forth by the petitioner before the Assessing Officer, however, with respect to providing a reasonable opportunity of hearing as per the circular dated 22-08-2022 of the Central Board of Direct Taxes, the Court said that reasonable opportunity of hearing had not been granted to the petitioner, before the order under Section 148(d) of the Act was issued.
The Court said the explanation under Section 148 of the Act regarding information that could be relied upon by the Assessing Officer to reopen assessment of escaped income, and Revenue Audit Objections was a valid ground for re-opening assessment that had already been concluded.
The Court noted that the Assessing Officer had acted with undue haste, as despite the petitioner asking for all documents and an opportunity of a personal hearing to be granted, the same was rejected.
The Court, therefore, set aside the impugned order, allowing the writ petition to the extent of directing the respondents to provide petitioner all relevant documents within one week upon payment of requisite fees by the petitioner to the department, and further directed that the petitioner be granted a personal hearing by the Assessing Officer after which an order under Section 148(d) of the Act be passed within three weeks, thereafter.
[Gyan Prakash Rastogi v. Union of India, Writ Tax No. 195 of 2024, decided on 26-07-2024]
Advocates who appeared in this case :
Advocates for Petitioner: Aakash Prasad, Himanshu Singh, Advocates
Advocate of Respondents: Varun Pandey, Neerav Chitravanshi, Kushagra Dikshit, Advocates
