M/S BHARATH RMC PRODUCTS V. THE ASSISTANT COMMISSIONER OF INCOME TAX

WP/5836/2023

AI Insights

The case involves M/s Bharath RMC Products, a partnership firm, challenging notices and an order issued by the Assistant Commissioner of Income Tax under various sections of the Income Tax Act, 1961, for the assessment year 2018-19. The petitioner contended that the notices and the subsequent order were issued without providing an adequate opportunity for a personal hearing, despite a request made for such a hearing. The court considered the lack of opportunity for a personal hearing as a significant procedural flaw and restored the proceedings to allow for a fair hearing. The case also touched upon the issue of whether the petitioner should be allowed to cross-examine a person whose statement was used as a basis for reassessment, despite not being an employee of the petitioner.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 752715 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 16-03-2023
• Assessment Year: misc
• Other Referred Cases: CIT v. Smt. Sunita Dhadda, R.W. Promotions P. Ltd., v. Assistant Commissioner of Income-Tax
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M DILIP
• Assessee Lawyers: ANNAMALAI
• Keywords: Cross Examination; Cross-examination; Income Tax; Personal hearing; Reassessment; Writ petition
• Section: 148; 148A(b); 148A(d)

Judgement Text

" - 1 - WP No. 5836 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 16TH DAY OF MARCH, 2023 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 5836 OF 2023 (T-IT) BETWEEN: M/S BHARATH RMC PRODUCTS A APRTNERSHIP FIRM, CONSTITUTED UNDER THE PARTNERSHIP ACT 1932, REPRESENTED BY ITS MANAGING PARTNER, SRI SANGAYYA VEERABHADRAYYA HIREMATH, S/O VERERABHADRAYYA HIREMATH, AGED ABOUT 58 YEARS, 99, CHEMASANDRA VILLAGE, OPP GRINDWELL, NORTON INDUSTRIAL AREA, VIRGO NAGAR, BENGALURU -560049. …PETITIONER (BY SRI. ANNAMALAI S., ADVOCATE) AND: 1. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1 (2), CENTRAL TAX, CENTRAL CIRCLE 1 (2), CENTRAL REVENUE BUILDING, NO.1 QUEENS ROAD, BENGALURU -560 001. 2. THE PRINCIPAL COMMISSIONER OF INCOME TAX CENTRAL, Digitally signed by NARASIMHA MURTHY VANAMALA Location: HIGH COURT OF KARNATAKA - 2 - WP No. 5836 of 2023 CENTRAL REVENUE BUILDING, NO.1,QUEENS ROAD, BENGALURU -560 001. …RESPONDENTS (BY SRI.M DILIP., ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE NOTICE ISSUED U/S 148A(b) OF THE ACT DATED 10.03.2022 BEARING DIN AND LETTER NO.ITBA/AST/F/ 148A(SCN)/ 2021-22/ 1040554582(1) ISSUED BY THE R1 FOR THE ASSESSMENT YEAR 2018-19 HEREIN MARKED AS ANNEXURE-A1; QUASH THE ORDER DATED 30.03.2022 PASSED U/S 148A(d) OF THE ACT BEARING DIN AND ORDER NO.ITBA/AST/F/148A/2021-22/1042122836(1) ISSUED BY THE R1 FOR THE ASSESSMENT YEAR 2018- 19 HEREIN MARKED AS ANNEXURE-A2;QUASH THE NOTICE DATED 31.03.2022 ISSUED U/S 148 OF THE ACT BEARING DIN NO.ITBA/AST/S/148-1/2021- 22/1042382279(1) ISSUED BY THE R1 FOR THE ASSESSMENT YEAR 2018-19 HEREIN MARKED AS ANNEXURE-A3. THIS PETITION, COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioner has called in question the notice dated 10.03.2022 [Annexure - A1] issued under Section 148A(b) of the Income Tax Act 1961 (for short, ‘the IT Act’) for the assessment year 2018-19, the subsequent adjudication order dated 30.03.2022 - 3 - WP No. 5836 of 2023 under Section 148A(d) of the IT Act [Annexure - A2] and the consequential notice dated 31.03.2022 under Section 148 of the IT Act [Annexure - A3]. 2. The petitioner has urged multiple grounds, but the principal ground is that upon receipt of notice dated 10.03.2022 issued under Section 148A(b) of the IT Act, the petitioner has filed response on 16.03.2022 requesting for personal hearing, and despite such request the first respondent has passed the impugned order dated 30.03.2022 without opportunity. Sri Annamalai S., the learned counsel for the petitioner, and Sri.M.Dilip, the learned standing counsel for the respondents, who is called upon to accept notice, are heard for final disposal in the light of this grievance. 3. Sri Annamalai S., while reiterating the aforesaid ground, submits that if lack of due opportunity can be demonstrated, it can also be demonstrated that, in the circumstances of the case, - 4 - WP No. 5836 of 2023 the petitioner must be granted an opportunity to cross-examine the person who has recorded the statement of Sri B.S.Nagaraj, who is not even employed with the petitioner, but whose statement is made the reason for the proposed reassessment. Sri.Annamalai S. argues that if opportunity is extended, the petitioner will be able to demonstrate the circumstances which establish that the very initiation would be impermissible given the provisions of Sections 147 and 148 of the IT Act. Sri M.Dilip, submits that even if the petitioner could succeed on the ground of lack of due opportunity, the petitioner cannot succeed in the challenge as against the notice dated 10.03.2022 under Section 148A(b) of the IT Act, and he supports the order dated 30.03.2022 contending that it would be open to the petitioner to show cause against the reassessment even after such order. - 5 - WP No. 5836 of 2023 4. However, it remains salient that an opportunity of personal hearing is contemplated within the provisions of Section 148A of the IT Act and a request is also made in accordance thereof but is not extended. This demonstrates lack of opportunity and therefore, this Court must intervene insofar as the order dated 30.03.2022 under Section 148A(d) and the consequential notice dated 31.03.2022 restoring the proceedings to the stage where opportunity of personal hearing will have to be extended by the first respondent. 5. In the light of the grounds urged in support of the very initiation of the reassessment proceedings, it would also be just and reasonable to extend another opportunity to the petitioner to file supplementary submissions. Further, the petitioner’s request for cross examination must be considered in the light of the applicable precedents, in the decisions in 'CIT v. Smt. Sunita Dhadda' reported in [2017] - 6 - WP No. 5836 of 2023 SCC OnLine Raj 4356 and 'R.W. Promotions P. Ltd., v. Assistant Commissioner of Income-Tax' reported in 2015 SCC OnLine Bom 8429. Hence, the following: ORDER (i) The petition is allowed-in-part and the order dated 30.03.2022 [Annexure-A2] and the notice dated 31.03.2022 [Annexure-A3] are quashed and the proceedings restored to the first respondent to the stage where the petitioner being extended an opportunity of personal hearing. (ii) The petitioner is reserved liberty to file additional supplementary pleadings along with the request for examination of the person as mentioned in the writ petition. If supplementary submissions are filed with the request as - 7 - WP No. 5836 of 2023 aforesaid, the same shall be considered by the first respondent strictly in accordance with law as aforesaid. Sd/- JUDGE SA ct:sr "