PRAMOD KUMAR MADHOGARHIA V. UNION OF INDIA AND ORS.

MAT/729/2023

AI Insights

The case involves an intra-Court appeal by the writ petitioner, Pramod Kumar Madhogarhia, against the dismissal of his writ petition challenging an order under Section 148A(d) of the Income Tax Act, 1961. The appellant contended that the show-cause notice issued under Section 148A(b) was inadequately timed, as it was served just before two holidays, preventing a comprehensive response. The court found that the appellant was not given an adequate opportunity to respond effectively, constituting a violation of the principles of natural justice. Consequently, the court set aside the previous orders and restored the matter for re-evaluation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 735437 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 12-05-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SMITA DE
• Assessee Lawyers: HIMANGSHU RAY; PABAN RAY; SHIWANI SHAW; NITISH BHANDARY
• Keywords: Intra-Court Appeal; Order under section 148A(d); Show cause notice; Violation of Principles of Natural Justice; Writ petition
• Section: 147; 148A(b); 148A(d)

Judgement Text

"Form No. J.(2) Item No.2 IN THE HIGH COURT OF JUDICATURE AT CALCUTTA CIVIL APPELLATE JURISDICTION APPELLATE SIDE HEARD ON: 12.05.2023 DELIVERED ON: 12.05.2023 CORAM: THE HON’BLE CHIEF JUSTICE T.S. SIVAGNANAM AND THE HON’BLE MR. JUSTICE HIRANMAY BHATTACHARYYA MAT 729 of 2023 With I.A. No. CAN 1 of 2023 Pramod Kumar Madhogarhia Vs. The Union of India & Ors. Appearance:- Mr. Himangshu Kumar Ray Mr. Paban Kumar Ray Ms. Shiwani Shaw Mr. Nitish Bhandary ………..For the Appellant Ms. Smita Das De ……….For the Respondents JUDGMENT (Judgment of the Court was delivered by T.S. SIVAGNANAM, C.J.) 1. This intra-Court appeal by the writ petitioner is directed against the order dated 4th April, 2023 in W.P.A. No.6378 of 2023. In the said order, the appellant had challenged the order passed by the respondents under Section 148A(d) of the Income Tax Act, 1961 (for brevity, “the Act”) dated 30th March, 2022. The learned Single Bench had dismissed the writ petition on the ground that during the pendency of the writ petition, an order under Section 147 of the Act has been passed on 22nd March, 2023, which is an appealable order. Aggrieved by the dismissal of the writ petition, the appellant has filed the present appeal. 2. We have heard Mr. Himangshu Kumar Ray, learned advocate for the appellant and Ms. Smita Das De, learned standing counsel for the respondents. 3. The respondents issued notice under Section 148A(b) of the Act dated 15th March, 2022. The said notice was served through e-mail on 16th March, 2022 at 01:02 pm IST. The appellant’s contention is that both 17th March, 2022 and 18th March, 2022 were holidays. Nevertheless, with whatever records, which were there in their possession, an interim reply was sent on 17th March, 2022. The respondents had passed the order under Section 148A(d) of the Act on 30th March, 2022, which was impugned in the writ petition. 2 2 4. On a perusal of the said order, we find that there is no discussion about the reply filed by the appellant but certain figures, which have been mentioned in the reply, have been noted in the order dated 30th March, 2022. However, there is a fundamental error in the decision making process because the show-cause notice dated 15th March, 2022 states that information, as received from sources that the assessee have had a purchase transaction with two parties and they were directed to furnish the corroborative and authentic details/documents in support of the two transactions, but the source of the information has not been disclosed to the assessee nor as to on what basis the Assessing Officer entertained such doubts with regard to those transactions. Nevertheless, the assessee submitted an interim reply stating about the nature of transactions with those two parties and enclosed the ledger for ready reference of the respondents. 5. The appellant’s case is that due to want of time, the appellant could not produce the bank statements and other documents, more particularly when 17th March, 2022 and 18th March, 2022 were holidays. The Assessing Officer appears to have not given an opportunity of hearing to the assessee nor has specifically dealt with the correctness of the ledger, which were enclosed along with the interim reply dated 17th March, 2022. 6. We are of the opinion that the time granted to the assessee to submit his reply especially when the source of information based on which the reopening proceedings were initiated having not been disclosed to the 3 3 assessee, was thoroughly inadequate. This has disabled the assessee from putting forth his submissions in a proper and effective manner. 7. It is true that the assessee had filed the writ petition only on 16 th March, 2023. However, in the interregnum, the Assessing Officer has not passed the order under Section 147 of the Act. However, such an order was passed during the pendency of the writ petition presumably on the ground that no interim order was in force in the writ petition. 8. Be that as it may, the opportunity afforded at the first instance should be an effective opportunity because the power of reopening of an assessment is a power, which is to be sparingly used for adequate reasons. Therefore, we are convinced to hold that there has been violation of principles of natural justice. 9. For the above reasons, the appeal is allowed and the order passed in the writ petition is set aside and the writ petition is allowed and the order passed under Section 148A(d) of the Act and the assessment order dated 22nd March, 2023 are set aside and the matter stands restored to the file of the respondents/Assessing Officer at the stage of the show-cause notice under Section 148A(b) of the Act. 10. The assessee is directed to submit a comprehensive reply enclosing all documents in support of his claim and the Assessing Officer shall redo the process in accordance with law. The assessee cannot raise the point of 4 4 limitation before the Assessing Officer as this order has been passed accepting the case of the assessee that there has been violation of the principles of natural justice, alleged. The Assessing Officer shall also furnish the relevant documents based on which the show-cause notice dated 15th March, 2022 under Section 148A(b) of the Act has been issued. 11. The Assessing Officer shall also afford an opportunity of personal hearing to the authorised representative of the assessee. 12. There shall be no order as to costs. 13. Urgent Photostat certified copy of this order, if applied for, be furnished to the parties expeditiously upon compliance of all legal formalities. (T.S. SIVAGNANAM) CHIEF JUSTICE I agree, (HIRANMAY BHATTACHARYYA, J.) Pallab/K.S. AR(Ct.) 5 5 "