Order passed u/s 148A(d) set aside as personal hearing was not given to submit objections
In a recent judgment, Hon’ble Madras High Court has set aside the order passed u/s 148A(d) and notice u/s 148A for not providing opportunity of personal hearing to submit his objections to reopening.
ABCAUS Case Law Citation:
4235 (2024) (08) abcaus.in HC
In the instant case, the assessee had filed a Writ Petition challenging the order passed under section 148A(d) of the Income Tax Act 1961 (the Act) and subsequent impugned notice issued under Section 148 with prayer to quash the same as illegal for not providing opportunity of personal hearing.
The notice under Section 148-A(b) of the Act was issued on the premise that there was unexplained credit to the account of the petitioner and the assessee had not filed the return of income tax for the relevant assessment year.
In response to the above notice, the petitioner had submitted his reply wherein, inter alia he had stated that he had received the sum from a family friend, who was working abroad. The entire money had been received only through proper banking channel and the same was returnable to the said family friend. The copies of the bank account statements to that effect were also enclosed along with the reply. The petitioner in his reply requested for an opportunity of personal hearing and also sought for the basis on which they have arrived at the figure representing unexplained credit.
However, the impugned order under Section 148A(d) was passed on the finding that the petitioner has not filed return of income tax for the assessment year as specified under Section 139(1) of the Act and that the said person was covered under the definition of the “relative” in terms of the Section 2(41) of the Act and thus, the reply filed by the assessee in response to the notice under Section 148A(b) was not accepted.
The grounds raised by the assessee were that his objection had not been considered in its proper perspective, opportunity to explain his objection in person had not been considered, the details based on which the notice under Section 148-A(b) of the Act was issued, had not been disclosed, despite the specific request made by the petitioner.
The High Court observed that section 148A came up for consideration before the Hon’ble Supreme Court wherein, the object and purpose of inserting Section 148-A of the Act was explained observing that the new provisions substituted by the Finance Act, 2021 being remedial and benevolent in nature and substituted with a specific aim and object to protect the
rights and interest of the assessee. The above judgment was followed by the Division Bench of the Court which observed that legislature has introduced Section 148A of the Act, which is an enquiry undertaken before issuance of notice under Section 148 of the Act, and one cannot reduce the provisions under Section 148 A of the Act to an empty formality/ dead letter.
The High Court opined that the impugned order insofar as it did not disclose the basis of arriving at figure of unexplained credit suffered from non disclosure of reason which prompted the invocation of Section 148-A of the Act and the same had resulted in denial of opportunity to the petitioner to put forthwith his explanation.
Further, the High Court noted that in any view, the circular of the department in F.No.299/10/2022-Dir (Inv.III)/611, dated 01.08.2022, insofar as it provides that a request for personal hearing would be considered/dealt with is binding on the respondent authorities.
The Hon’ble High Court observed that the fact was that the petitioner had requested for an opportunity to submit his objection in person which was not considered by the respondents, therefore, the Court was inclined to set aside the impugned proceedings and direct the respondents to pass orders, after disclosing the basis on which the notice was issued stating that the sum representing the unexplained credit, in accordance with law and affording an opportunity of personal hearing to the petitioner.
Accordingly, the impugned order, under clause 148A(d) of the Act and impugned notice under Section 148 of the Act were set aside.
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