Girdhar Gopal Dalmia vs Union Of India & Ors

By consent of the parties, we take up the appeal itself for hearing and disposal.

This intra-Court appeal is directed against the order dated 26th April, 2022 in W.P.A. No.7034 of 2022. The appellant challenged the notice issued under Section 148A(b) of the Income Tax Act, 1961 (for short, “the Act”) dated 17th March, 2022 on the ground that adequate opportunity has not been granted to the appellant though the statute specifies that minimum 7 days’ time should be granted to the assessee to respond and the assessee should be heard in the matter. However, the assesee has also uploaded a reply dated 23rd March, 2022 in which there were enclosures and after making submission on merit, they have pointed out that seven clear days notice was not granted to the assessee and had requested the Assessing Officer to provide all the details of enquiry conducted by the department and also copy of the statement recorded from Sri Praveen Kumar Kasera under Section 132(4) of the Act on 2nd February, 2018. The respondent / Assessing Officer has passed the order dated 29th March, 2022 under Section 148A(d) of the Act in which he has noted that the assessee has submitted an elaborate reply. However, the Assessing Officer proceeds on the basis that in the reply, substantial portion has been devoted by discussing the effect of Section 148, 148A of the Act and the assessee has avoided to give specific answers to the pointed questions and given a generalised and inaccurate reply on certain issue and preferred to remain totally silent on other issues for reasons best known to him. It is, therefore, notice under Section 148 has been issued to the appellant which is also dated 29th March, 2022. It is at that stage the writ petition came to be filed.

Firstly, to test the correctness of the finding recorded by the Assessing Officer about the tenor of the reply, we have perused the reply given by the assessee and we find that there is no elaborate discussion on the effect of Section 148, 148A of the Act. In fact, the reply is on merits. According to the learned senior Advocate appearing for the appellant, it is submitted not only the reply was given but enclosures have been uploaded including bank statements to show that the remittances were through proper banking channels. Further, it is submitted that reasonable opportunity was not being granted to the appellant. In support of the contention, the learned senior Advocate has referred to the decision in the case of M/s. R. N. Fashion Vs. Union of India & Ors. in APOT 85 of 2022 dated 20th March, 2022.

We have elaborately heard Mr. Soumen Bhattacharya, learned standing counsel for the respondent, on the above submission. Firstly, Clause (b) of Section 148A of the Act provides for an opportunity of being heard to the assessee within such time as may be specified in the notice that has to be issued by the Assessing Officer and the period shall be not less than 7 days and but not exceeding 30 days from the date on which such notice was issued together with a power to grant further time on an application made by the assessee. Therefore, the statute gives discretion to the Assessing Officer to fix the notice period and such time limit has to be fixed bearing in mind the principles of natural justice that the assessee should be afforded reasonable and adequate opportunity. The show cause notice issued under Section 148A (b) of the Act was received online by the assessee on 17th March, 2022. The impugned order has been passed on 29th March, 2022 and according to the Assessing Officer, the assessee has not produced any document to substantiate his claim. To be noted that 17th March, 2022 was declared as a State holiday on account of Holi festival and 18th March, 2022 (Friday) was also declared as holiday and 19th March, 2022 and 20th March, 2022 being Saturday and Sunday, the next working day is 21st March, 2022. Therefore, the period of notice issued to the assessee cannot be stated to be affording a reasonable and adequate opportunity to the appellant / assessee.

The learned standing counsel would submit that the assessee has submitted his reply which has also been referred to by the Assessing Officer in his order under Section 148A(b) of the Act. As rightly pointed by the learned senior Advocate for the appellant that nowhere in the reply given by the assessee, there is any elaborate discussion about Section 148, 148A of the Act and probably there occurred a factual mistake at the hands of the Assessing Officer. The assessee had enclosed certain documents along with the reply and had made submissions on merit and on our reading, we find that no elaborate discussion about Section 148 or 148A of the Act. Be that as it may, the opportunity of hearing to be provided should be reasonable and not illusory. If the appellant had received the show cause notice on 17th March, 2022 online, then for calculating the period of 7 days, namely 17th March, 2022 has to be excluded. If that is so, the period of 7 clear days does not stand fulfilled in the case on hand. Apart from that, 18th March, 2022, 19th March, 2022 and 20th March, 2022 are to be excluded since they are all holidays on account of Holi festival. Further, we state that the State of West Bengal had declared 17th March, 2022 also as a holiday though for the Central Government, no such holiday was declared and an identical issue was considered by us in the case M/s. R. N. Fashion (supra).

Considering all these factors, we are of the view that the assessee should be granted an opportunity by the Assessing Officer in terms of Clause (b) of Section 148A of the Act, which provides for an opportunity of being heard to the assessee. For such reason, we are inclined to remand the matter back to the Assessing Officer for fresh consideration. The notice issued under Section 148 of the Act dated 29th March, 2022 shall not be enforced and a fresh action can be initiated in accordance with law after complying with the following direction.

The appellant shall submit a fresh reply within two weeks from the date of receipt of the server copy of this judgment and order and upload the reply online and the appellant is at liberty to also refer to the order dated 29th March, 2022 under Section 148A (b) of the Act and also give his reply. On receipt of the said reply, the authorised representative of the appellant shall be given an opportunity of personal hearing through video conferencing and the documents that the assesee may produce shall also be considered and fresh order under Clause (d) of Section 148A of the Act be passed in accordance with with law.

The appellant has requested for copies of certain documents. The Assessing Officer before affording an opportunity of hearing shall take note of the said representation and take a decision on merits and in accordance with law and thereafter proceed further in terms of the directions.

With the aforesaid direction, the appeal and the connected application are disposed of.

No costs.

Urgent photostat certified copy of this order, if applied for, be furnished to the parties expeditiously upon compliance of all legal formalities.