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IN THE HIGH COURT OF JUDICATURE AT BOMBAY, AURANGABAD BENCH
RAVINDRA V. GHUGE, Y.G. KHOBRAGADE, JJ.
Satguru Sai Extrusions Private Limited Through Its Authorized Person Managing Director & Ors. - Petitioners
Versus
Union of India Through Ministry of Finance & Ors. - Respondents
Writ Petition Nos. 10075, 10078 of 2023
Decided On : 08-01-2024
INCOME TAX - INTERPRETATION OF SECTION 148A - [148A] - The court discussed the interpretation of Section 148A(b) of the Income Tax Act, which mandates an opportunity of being heard to the assessee. The court concluded that a show cause notice under Section 148A(b) does not necessarily include a personal hearing. The court also discussed the requirement of conducting an enquiry before issuing a notice under Section 148A(a) and concluded that the words 'if required' grant discretion to the Assessing Officer to conduct an enquiry.
Fact of the Case:
The Petitioners raised two issues regarding the interpretation of Section 148A of the Income Tax Act. The first issue was whether a show cause notice under Section 148A(b) necessarily includes a personal hearing. The second issue was whether an enquiry is mandatory before issuing a notice under Section 148A(a). The facts of the case involved the Petitioners being issued with notices of hearing under Section 148A(b) and subsequent orders being passed under Section 148A(d).
Finding of the Court:
The court found that a show cause notice under Section 148A(b) does not necessarily include a personal hearing. It also found that the words 'if required' in Section 148A(a) grant discretion to the Assessing Officer to conduct an enquiry before issuing a notice.
Issues: The issues raised were the interpretation of Section 148A(b) regarding the necessity of a personal hearing and the requirement of conducting an enquiry before issuing a notice under Section 148A(a).
Ratio Decidendi: The court interpreted the language of Section 148A(b) and (a) and considered relevant case law and legal principles to conclude that a show cause notice under Section 148A(b) does not necessarily include a personal hearing and that an enquiry before issuing a notice under Section 148A(a) is discretionary.
Final Decision: The court disposed of both petitions and directed the Income Tax Department to follow the due procedure laid down in law and ensure that the Petitioners are extended an adequate and reasonable opportunity to contest the notice under Section 148. All contentions of the parties were kept open.
JUDGMENT :
1. In both these matters, the Petitioners have raised 2 issues. Firstly, that Section 148A(b) of the Income Tax Act, r/w the proviso thereunder, shall be read to mean that, an opportunity of being heard to the Assessee should necessarily and mandatorily include a personal hearing in the matter. The second issue raised is that, before a notice is issued u/s 148A to the Assessee by the Assessing Officer, the latter shall conduct an enquiry and the words " if required", as appearing on internal page No.48 of the ‘Memorandum Explaining the Provisions in the Finance Bill 2021’, shall be read to mean that an enquiry should be necessarily and mandatorily conducted as a precondition before issuing a notice to the Assessee.
2. In so far as the facts of the case are concerned, they are not in dispute to the extent of the Petitioners having been issued with a notice of hearing u/s 148A(b) and after filing of detailed replies by the Petitioners, orders having been passed u/s 148A(d). It is also not in dispute that a notice u/s 148 of the Income Tax Act,1961 has now been issued to the Petitioners and the proceedings are underway.
3. For brevity, we are reproducing the chronological dates and events as are tendered by the individual Petitioners in their synopsis ( verbatim).
4. In WP No.10075/2023, the dates and events read (verbatim) as under :-
| Sr. No. | Date | Particulars | Exhibit | Page No. |
| 1. | 31.10.2019 | Petitioner filed Income Tax Return for the Assessment Year 2019-20. | A | 28 to 108 |
| 2. | 01.03.2023 | Respondent No.4 issued a Notice under clause (b) of Section 148A of the Income Tax Act, 1961. | B | 109 to 118 |
| 3. | 13.03.2023 | Petitioner's Director requested Respondent No.4 to allow an additional 8-10 days to file a response to the Notice dated 01.03.2023 vide mail | C | 119 to 120 |
| 4. | 23.03.2023 | Petitioner submitted a Written Reply in response to the Notice dated 01.03.2023 | D | 121 to 127 |
| 5. | 29.03.2023 | Respondent No.3 granted approval under Section 151 of Income Tax Act, 1961 | E | 128 |
| 6. | 30.03.2023 | Respondent No.4 issued order under clause (d) of Section 148A of the Income Tax Act, 1961 | F | 129 to 135 |
| 7. | 30.03.2023 | Respondent No.4 issued a Notice under Section 148 of Income Tax Act, 1961 | G | 136 |
5. In WP No.10078/2023, the dates and events are reproduced (verbatim) as under :-
| Sr. No. | Date | Particulars | Exhibit | Page No. |
| 1. | 31.10.2019 | Petitioner filed Income Tax Return for the Assessment Year 2019-2020 | A | 30 to 111 |
| 2. | 01.03.2023 | Respondent No.4 issued a notice under clause (b) of Section 148A of the Income Tax Act, 1961. | B | 112 to 138 |
| 3. | 10.03.2023 | Respondent No.4 issued letter thereby providing certain additional information. | D | 141 to 146 |
| 4. | 13.03.2023 | Petitioner requested Respondent No.4 to allow an additional 8-10 days to file a response to the Notice dated 01.03.2023 vide mail. | C | 139 to 140 |
| 5. | 23.03.2023 | Petitioner submitted a Written Reply in response to the notice dated 01.03.2023 | E | 147 to 153 |
| 6. | 31.03.2023 | Respondent No.3 granted approval under Section 151 of Income Tax Act, 1961 | F | 154 to 156 |
| 7. | 31.03.2023 | Respondent No.4 issued order under clause (d) of Section 148A of the Income Tax Act, 1961. | G | 157 to 163 |
| 8. | 31.03.2023 | Respondent No.4 issued a Notice dated 31.03.2023 under Section 148 of Income Tax Act, 1961. | H | 164 |
FIRST ISSUE - PERSONAL HEARING
6. In both these matters, after notices were issued, the Petitioners approached the Authorities for extension of time, keeping in view that the period of 30 days is available u/s 148A(b). It is also conceded that extension of time was granted to these Petitioners, who have submitted their detailed written replies within the extended time. It is undisputed that the last sentence in these replies so filed, indicates a request made by these Petitioners to th
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