MANAS RANJAN BEURA V. INCOME TAX OFFICER,WARD 2,CUTTACK

WP(C)/26537/2019

AI Insights

The case involves a petitioner, a petrol pump dealer, who contested an assessment order for the Assessment Year 2017-2018, claiming it violated the principles of natural justice. The petitioner argued that the Assessing Officer ignored crucial provisions of the Income Tax Act, 1961, specifically Section 142(3) and the guidelines under Annexure-9, which mandate a personal hearing when requested by the assessee, especially in cases involving voluminous documents. The Income Tax Department, represented by Mr. Chimanka, contended that the petitioner should have pursued the matter through the appellate provisions of the Act rather than filing a writ application. The court, however, found that the violation of natural justice was significant enough to warrant intervention under writ jurisdiction, overriding the objection of the Revenue.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 761768 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 14-01-2020
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: CHIMANKA
• Assessee Lawyers: RAY
• Keywords: Assessment Order; Natural Justice; Personal hearing; Scrutiny; Voluminous documents
• Section: 142(1); 143(2); 68; 133(6); 69A; 142(3)

Judgement Text

" 03. 14.01.2020 Heard learned counsel for the petitioner and Mr. Chimanka, learned counsel appearing for the Income Tax Department. Mr. Ray, learned counsel for the petitioner submits that the assessment order is bad for violation of principles of natural justice, as learned Assessing Officer has completely ignored and has not taken into consideration the provisions contained in sub-section-(3) of Section- 142 of the Income Tax Act, 1961, for short “the Act” and paragraph-4(I) of Annexure- 9. According to Mr. Ray, the assessee- petitioner is a petrol pump dealer. For the Assessment Year 2017-2018, the petitioner filed return of income electronically on 27.10.2017 showing the total income of Rs.14,58,080.00. On 14.08.2018, notice U/S. 143(2) of “the Act” was issued to the petitioner vide Annexure- 5. The petitioner requested the Opposite Party no.1 to intimate the reason as to why his case was selected for scrutiny. No reason was communicated. Rather on 25.07.2019, a notice was issued under Section 142(1) of “the Act” directing the petitioner to produce documents & books of accounts. The petitioner complied with the notice and filed all the documents before the Assessing Officer except the books of accounts, bills & vouchers with a request to produce these voluminous documents physically, as these are W.P.(C) NO.26537 of 2019 2 maintained manually. Vide Annexure- 6, the petitioner was issued further show cause vis-a-vis information obtained under Section 133(6) by “the Act”. The petitioner submitted his reply under Annexure- 7. However, without conducting a hearing as required under Note on E-Proceeding under Annexure- 9 & in violation of sub-section-(3) of Section- 142 of “the Act”, the impugned assessment order under Annexure- 1 has been passed. Thus, according to Mr. Ray, there has been gross violation of principles of natural justice for which, the assessment order under Annexure- 1 should be set aside. Mr. Chimanka, learned counsel for the Revenue/Union of India submits that, there being appeal provision under Section 246 of “the Act”, the petitioner should have preferred appeal instead of filing this writ application to avoid deposit. According to Annexure- 9, Note on ‘E-Proceeding’ as per paragraph-4, in cases under ‘E-Proceeding’, hearing may be conducted manually in following situation(s): (i) where books of accounts have to be examined ; or (ii) where provision of section 131 of Income-tax Act, 1961 has been invoked; or 3 (iii) where examination of witness is to be made by assesse or Assessing Officer; or (iv) where a show-cause notice contemplating any adverse view is issued and assesse requests for personal hearing to explain the matter. Section 142(3) of “the Act” also speaks of giving reasonable opportunity of hearing in respect of any material gathered in an enquiry under sub- section-(2) of Section 142. Here, the petitioner has requested for permission to physically produce Books of Accounts etc., as those were/are voluminous in nature. It is not disputed that the information/materials were collected under Section 133(6) of “the Act” from the Banks as indicated in the notice under Annexure- 6. Despite all these, the assessment order vide Annexure- 1 came to be passed adding Rs. 34,78,000.00 under Section 69A as per point no.1, Rs.1,18,94,500.00 under Section 68 as per point no.2 and Rs.1,56,43,433.00 as per point no.3 of the assessment order without giving any opportunity of hearing. The assessment was made on total income of Rs.3,24,73,990.00. 4 Taking into consideration the entire gamut of events and specifically in the background of provisions contained in Section-142(3) of “the Act” and Annexure- 9 to the writ application, we are of the view that the petitioner should have been given an opportunity of personal hearing. Since such an opportunity was not given, there has been gross violation of principles of natural justice. Law is well settled that the alternative remedy by way of an appeal is no bar for exercising writ jurisdiction, where the impugned order has been passed in gross violation of principles of natural justice. Accordingly, we overrule the objection of the learned counsel for the Revenue and set aside the assessment order under Annexure- 1 & remit the matter to the Assessing Officer to dispose of the assessment proceeding afresh, after giving personal hearing to the petitioner in accordance with law. The assessment be completed as expeditiously as possible. Urgent certified copy of this Order be granted as per rules. ……………………………. C.R. Dash, J. …………………………….. Subha Biswajit Mohanty, J. 5 Subha 6 "