Allahabad High Court Sets Aside Income Tax Order Due to Lack of Opportunity of Personal Hearing and Relevant Documents

The Allahabad High Court recently made a significant ruling emphasizing the importance of providing the assessee with an opportunity of personal hearing and relevant documents prior to passing orders under Section 148 A(d) of the Income Tax Act, 1961.

The case, Gyan Prakash Rastogi vs. Union of India [WRIT TAX No. – 195 of 2024], involved a scenario where the petitioner and his brother were engaged in separate businesses but jointly acquired a shop. This shop became the subject of a search and seizure under the Income Tax Act, leading to the confiscation of certain loose documents and sheets. Subsequently, the petitioner received a notice under Section 148A(b) based on specific Audit Objections.

In response to the notice, the petitioner explicitly requested a copy of the Audit Objection and an opportunity of personal hearing. However, the order under Section 148A(d) was issued without supplying the petitioner with a copy of the Audit Objection or granting any opportunity of personal hearing. Furthermore, a subsequent notice under Section 148 was also issued.

The petitioner’s counsel challenged the order under Section 148A(d) and the subsequent notice under Section 148, citing guidelines issued by the Central Board of Direct Taxes for the issuance of reassessment notices under Section 148. The guidelines stipulated that a personal hearing should be provided when requested by the assessee in cases of reassessment notice issuance.

In its judgment, the Court observed that the petitioner’s reply explicitly requested the supply of documents and a personal hearing, which were not provided. The Court criticized the Assessing Officer’s undue haste in passing the order and emphasized the failure to adhere to the petitioner’s requests.

Consequently, the bench comprising Justice Sangeeta Chandra and Justice Shree Prakash Singh set aside the notice and order issued against the Petitioner. The Court’s decision was grounded on the failure to provide relevant documents, particularly the audit objection, and the absence of an opportunity for a personal hearing before the order was issued under Section 148 A(d). This ruling highlighted the importance of honoring the assessee’s explicit requests, as outlined in their objections/reply to the show cause notice under Section 148 A(b) of the Income Tax Act.

The Court’s decision resulted in the setting aside/quashing of the notice under Section 148 and the order under Section 148 A(d) of the Income Tax, 1961 issued by the authorities.

The legal representatives involved in the case were:

• Counsel for Petitioner: Aakash Prasad, Himanshu Singh, Areeb Uddin Ahmed
• Counsel for Respondent: Varun Pandey, Neerav Chitravanshi, Kushagra Dikshit

This ruling serves as a noteworthy precedent underscoring the significance of providing the assessee with a fair opportunity to present their case and access relevant documentation before decisive orders are passed under the Income Tax Act, 1961. For further details, the full order or judgment can be accessed [here](insert link to the order or judgment).

This insightful and illustrative judgment from the Allahabad High Court sheds light on the principles of procedural fairness and the pivotal role of providing the assessee with an opportunity to be heard and access essential documentation in income tax matters.