Orders passed u/s 148A(d) and 148 quashed for not providing copies of audit objection, all relevant documents and personal hearing
In a recent judgment, Hon’ble Allahabad High Court quashed the orders passed under Section 148A(d) and under Section 148 for not providing copies of audit objection, all relevant documents and personal hearing.
ABCAUS Case Law Citation:
ABCAUS 4177 (2024) (07) HC
In the instant case, the Petitioner had filed a writ petition, praying quashing of show cause notice u/s 148A(b) and order passed u/s 148A(d) of the Income Tax Act, 1961 (the Act)
The petitioner was in the businesses of trading of jewellery under two different trade name from a shop. The Income Tax Department initiated search and seizure operation under Section 132 of the Act at the joint shop of the petitioner. During the search and seizure operations cash, gold jewellery and silver jewellery were found alongwith 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 filed his return of income. After that the Assessing Officer issued notice under Section 142(1) to the petitioner to produce relevant documents and accounts in support of the returns filed by the petitioner. A questionnaire was issued to the Petitioner seeking explanations to the unaccounted cash, jewellery and loose documents & sheets. The petitioner filed his reply to the notice. Thereafter, the Assessing Officer passed an order under Section 143(3) of the Act wherein certain additions were made to the income that was declared by the petitioner on the basis of unexplained cash and on account of excess stock not recorded in the books of accounts.
The petitioner preferred an appeal before the Commissioner of Income Tax against the Assessment Order. During the pendency of the appeal, the Revenue Audit raised an objection to the Assessment Order that the Assessment had not been conducted in a manner prescribed by the Act and there was violation of Section 69(A) of the Act.
The Petitioner was again issued notice on the basis of Audit Objections under Section 148A(b) of the Act
The petitioner submitted a detailed reply wherein he asked for copies of Audit Objections and all relevant documents and also asked for personal hearing. However, the impugned order was passed under Section 148A(d) of the Act rejecting the reply submitted by the petitioner without providing him copies of Audit Objections and also without providing him opportunity of personal hearing.
Subsequently, a notice under Section 148 of the Act was issued on the same date, proposing reassessment of income. The petitioner again applied for certified copies of the record of assessment proceedings as well as reassessment proceedings. This application was filed alongwith payment of requisite fee, however, no documents have been provided.
Aggrieved, the Petitioner filed a Writ Petition seeking quashing of impugned orders and a direction to the Income Tax Department to supply to the Petitioner certified copies of the entire record of the assessment proceedings as well as the Reassessment proceedings.
The Petitioner relied upon the judgment of Hon’ble Madras High Court and High Court of Bombay along with the CBDT Circular dated 22.08.2022 regarding uploading of data on functionalities/portal of the Income Tax Department and Guidelines for issuance of notice under Section 148 of the Act.
On the contray, the Income Tax Department placed reliance on the judgment of the Hon’ble Kerala High Court holding that audit objection is one of the reasons for re- opening the assessment. The Department also relied upon the judgment of the Co-ordinate Bench of the Allahabad High Court where it was observed that detailed hearing not being necessary to be given at the stage of issuance of show cause notice under Section 148A(b) and before passing of the order under Section 148A(d). Further, in their support the Department also placed reliance on the judgment of the Hon’ble Supreme Court.
The Hon’ble High Court observed that in the judgment of the Kerla High Court nowhere the Court held that the Department can ignore the CBDT Circular dated 22.08.2022 or even the Circular dated 01.08.2022.
The Hon’ble High Court clarified that there was no dispute to the law as settled not only by the Coordinate Bench but also by the Supreme Court. Neither the Court was making any observations regarding the merits of the case that has been set up by the petitioner before the Assessing Officer.
The Hon’ble High Court stated that it was only with respect to providing reasonable opportunity of hearing as per Circular dated 22.08.2022 of the Central Board of Direct Taxes that this Court has found that such reasonable opportunity of hearing was not given before Order under Section 148(d) was issued.
The Hon’ble High Court opined that there is no dispute regarding explanation given under Section 148 regarding information that can be relied upon by the Assessing Officer to reopen assessment of escaped income. Revenue Audit Objections can be considered as a valid ground for opening assessment that has concluded.
However, the reply of the petitioner had specifically asked for documents to be supplied including complete case proceedings and for personal hearing, which was not given. The Assessing Officer had acted in undue haste.
Accordingly, the impugned orders under Section 148A(d) and under Section 148 were set aside. The Department was directed to provide all relevant documents that have been asked for by the petitioner in his representation by making payment of necessary fees to the department and the petitioner shall submit his reply within one week, thereafter. A personal hearing shall be given by the Assessing Officer, and an order under Section 148(d) be passed after considering the submissions made by the petitioner.
Download Full Judgment Click Here >>
- For prosecution u/s 138 of NI Act reproducing language of Section 141 in verbatim not necessary – SC
- Punjab Sind Bank Concurrent Audit Online Empanelment FY 2025-26. Last date 31.05.2025
- IBBI prescribes timelines for IRP / RP to file the various e-Forms
- CPC cannot rectify and re-rectify intimation under Section 143(1)(a) repeatedly – HC
- Land sold without building, is not residential property but sale of adjacent land
 / 148 quashed for not providing copy of audit objection){kind=link}