Mr. Mahaveerchand S/o Mr. Vasimal V. Income Tax Officer Ward 3 (3)

WP/2691/2015

AI Insights

The case involves Mr. Mahaveerchand, the petitioner, challenging an assessment order and a consequential demand notice issued by the Income Tax Officer for the Assessment Year 2007-08. The assessment was based on a sworn statement by Mr. Mukesh Choksi, which implicated the petitioner in undisclosed income from share transactions. The petitioner argued that the assessment was unjust as it relied on a third-party statement without providing him an opportunity to contest its contents. The High Court of Karnataka found merit in the petitioner's argument, referencing a similar case and emphasizing the need for a fair hearing and access to evidence used against him.

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 810189 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 18-02-2015
• Assessment Year: misc
• Other Referred Cases: MR. ASHOK MITTAL vs ASSISTANT COMMISSIONER OF INCOME TAX AND ANOTHER
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JEEVAN NEERALGI
• Assessee Lawyers: HARISH S
• Keywords: Assessment Order; Income Tax; Opportunity to be heard; Reopening of assessment; Sworn statement
• Section: 147; 148; 143(3)

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 18TH DAY OF FEBRUARY 2015 BEFORE THE HON’BLE Mr. JUSTICE B.S.PATIL W.P. NO. 2691 OF 2015 (T-IT) BETWEEN: MR. MAHAVEERCHAND S/O MR VASIMAL AGED ABOUT 46 YEARS PRESENTLY RESIDING AT NO. 187/1, R V COMPLEX, KUMBARPET MAIN ROAD BANGALORE-560002 ... PETITIONER (By Sri : HARISH V S, ADV.) AND INCOME TAX OFFICER WARD 3 (3), UNITY BUILDING ANNEXE, MISSION ROAD BANGLAORE-560072 ... RESPONDENT (By Sri JEEVAN J.NEERALGI, ADV.) *** THIS WP FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ASSESSMENT ORDER PASSED BY THE RESPONDENT U/S.143 (3) R.W. SECTION 147 OF THE INCOME TAX ACT, 1961, DTD.31.10.2014 FOR THE ASSESSMENT YEAR 2007-08 i.e., ANNEX-D AND 2 CONSEQUENTIAL NOTICE OF DEMAND ISSUED BY THE RESPONDENT FOR THE ASSESSMENT YEAR 2007- 08 i.e., ANNEX-E. THIS PETITION IS COMING ON FOR PRELIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING:- ORDER In this writ petition petitioner is calling in question the assessment order dated 31.10.2014 passed under Section 143 (3) read with Section 147 of the Income Tax Act, 1961 (in short ‘the Act’) and consequential demand notice issued. Impugned order and notice are produced at Annexure-D & E. 2. Learned counsel Mr. Jeevan J.Neeralgi is directed to take notice for respondent. 3. As similar matters have been disposed of by this Court, this case is also taken up for final disposal though it is listed for preliminary hearing. 4. Facts involved in the matter in brief are as under: Petitioner has filed his return of income for the Assessment Year 2007-08 on 21-09-20007 declaring total income of 3 Rs.7,98,120/-. The said return was accepted. Subsequently, notice under Section 148 of the Act was issued proposing to reopen the assessment on the ground that petitioner had income under the head ‘other sources’ in a sum of Rs.34,67,752/-. In response, the authorized representative of the assess appeared and produced certain documents. However, the Assessing Officer has passed the impugned order holding that an amount of Rs.34,67,752/-, particularly with regard to share transaction, as reflected in the sworn statement of one Mr. Mukesh Choksi, Director of M/s Mahasagar Securities and other group of companies given before the Income Tax Officer, Mumbai had to be included. The Assessing Officer has based his order solely on the sworn statement made by Mr. Mukesh Choksi as could be seen from Paras-9.5 to 9.8 of the impugned order. 5. The main contention of the petitioner is that the said sworn statement made by a third party could not have been made basis for proceedings culminating in the impugned order. It is also pointed out by him that in the absence of a copy of the sworn statement being made available to the petitioner followed by an 4 opportunity of being heard, the Assessing Officer could not have placed reliance on the contents of the said sworn statement to fasten such huge liability on the petitioner. 6. I find considerable force in the said submission. It is not in dispute and in fact, it is apparent from the impugned order that without furnishing a copy of the statement, which is stated to have been made by one Mr. Mukesh Choksi, impugned order has been passed. Petitioner has not been served with the copy of the said sworn statement nor has he been given an opportunity to have his say with regard to the said sworn statement. Unless the petitioner is given an opportunity to rebut the contents of the said sworn statement and to have his say with regard to the correctness of the contents of the said sworn statement, it cannot be said that petitioner has been given an opportunity of being heard in the matter. 7. Learned counsel for petitioner has rightly placed reliance on a decision of the Division Bench judgment of the Delhi High Court in the case of MR. ASHOK MITTAL vs ASSISTANT COMMISSIONER OF INCOME TAX AND ANOTHER in 5 W.P. (C) No. 1452/2013, wherein also proceedings had been initiated and order impugned therein had been passed on the basis of the statement and the details furnished as per the sworn statement of the very same Mr. Mukesh Choksi. The Delhi High Court has held that in the absence of petitioner therein provided with the copy of the said sworn statement and the details it had to be held that there was absence of reasonable opportunity and as such the assessment order could not be sustained and could be interfered under Article 226 of the Constitution of India though there was an alternative remedy provided. In fact, this Court has also in other connected matters held so and has set aside similar orders passed by the Assessing Officer. 8. Hence, the writ petition is allowed. Impugned order is quashed. The matter is remanded for fresh consideration in accordance with law by providing fair and reasonable opportunity to the petitioner and by furnishing a copy of the sworn statement and other details said to have been give by the said Mr. Mukesh Choksi attributing certain income that has been made the basis for passing the impugned order. 6 The learned counsel Mr. Jeevan J.Neeralgi, is permitted to file vakalath within three weeks. SD/- JUDGE VK "