Affording Personal Hearing Is Mandatory In An Enquiry Under Section 148A(B) Of Income Tax Act: Kerala High Court

The Kerala High Court has held that affording a personal hearing to the assessee is mandatory in an inquiry under Section 148A(b) of the Income Tax Act.

The bench of Justice A.K. Jayasankaran Nambiar and Justice Kauser Edappagath has relied on the decision of the division bench in the case of Income Tax Officer v. Asamannoor Service Co-operative Bank Limited, in which it was held that the express provisions of Section 148A of the Income Tax Act contemplate that the assessee should be granted an opportunity of being heard, and the question arising in the appeal is only whether that opportunity to be effective must include a right to a personal hearing as well.

The appellant/department has challenged the judgement passed by the single judge in W.P. (C) No. 13727 of 2023. In the writ petition, the challenge of the writ petitioner was to the order passed by the Income Tax Officer Ward-2, Aluva, in terms of Section 148A(d) of the Income Tax Act and the consequential notice issued to the writ petitioner by the Officer under Section 148 of the Income Tax Act proposing a re-assessment of the income for the assessment year 2019-20.

The respondent or assessee contended that the department proceeded to pass an order without affording the petitioner an opportunity to be heard as mandated under Section 148A(b) of the Income Tax Act. It was therefore contended that order was vitiated on account of the non-compliance with the rules of natural justice, and consequently, notice too was vitiated in law.

The Single Judge found that, inasmuch as Section 148A contemplated the provision of an opportunity to be heard to the assessee, the non-providing of a personal hearing to the assessee vitiated the impugned orders and consequential notices. The order and notice were therefore quashed, and the writ petitioner was directed to appear before the department with all relevant documents in its possession for hearing. The court clarified that if the petitioner did not appear on 12.12.2023, no further opportunity needed to be granted to it by the Income Tax Officer.

The department is aggrieved only to the limited extent wherein the single judge held that a personal hearing is mandatory in an inquiry under Section 148A(b).

The department submitted that, considering the nature of the proceedings, the scheme of the statute, and the language of the provisions, the assessee is not required to be given an opportunity of personal hearing before passing an order under Section 148A(d).

The issue raised was whether affording a personal hearing to the assessee is mandatory in an inquiry under Section 148A(b) of the Income Tax Act.

The court, while dismissing the appeal of the department, held that Section 148A of the Income Tax Act contemplates that the assessee should be granted an opportunity to be heard, and that opportunity must include the right to a personal hearing as well.

Counsel For Appellant: Jose Joseph

Counsel For Respondent: Premjit Nagendran

Case Citation: 2024 LiveLaw (Ker) 222

Case Title: The Income Tax Officer Ward Versus Vazhakkulam Block Rural Co-Operative Society Ltd.

Case No.: WA NO. 176 OF 2024

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