IMPORTANT POINT
The court established that the discretionary nature of inquiries under Section 148A does not mandate a personal hearing or exhaustive justification for the Assessing Officer's decisions.

JUDGMENT :

(Manoj Kumar Tiwari, J.) :

1. By means of this writ petition, petitioner has sought the following relief:-

(i) Issue a writ, order or direction, in the nature of certiorari quashing all the assessment proceedings for the Assessment Year 2017-18 in respect of the notices u/s 148A(b) dated 21.03.224, notice u/s 148A(b) dated 29.03.2024 and notice u/s 148A(b) dated 03.04.2024 (Annexure Nos. 4, 5 & 7); Order u/s 148A(d), notice u/s 148 (issued by respondent no. 3), along with approval u/s 148 (accorded by respondent no. 2) (Annexure No. 8 (colly)); and to hold that the same are unconstitutional, without jurisdiction, void ab-initio, without proper opportunity of hearings and therefore against the principles of natural justice and fair play;

(ii) issue a writ, order or direction in the nature of mandamus directing the respondent nos. 2 & 3 to order de-nova assessment proceedings for the Assessment Year 2017-18, by following the procedures enshrined u/s 148A(a), 148A(b), 148A(c) & 148A(d) in letter and spirit; and allow reasonable opportunities of hearing, adhering to the principles of natural justice and fair play.

2. In this writ petition, petitioner has challenged three notices issued under Section 148A(b) of Income Tax, in respect of Assessment Year 2017-2018. He has also challenged the order under Section 148A(d) passed by Assistant Commissioner, Income Tax (respondent No. 3) and also the approval granted by Principal Chief Commissioner of Income Tax, Kanpur, (respondent No. 2) under Section 151.

3. Petitioner is a private limited company, which owns a Hotel at Rishikesh, District Dehradun known as Hotel Ganga View. According to petitioner, the said Hotel is being managed and operated by another Private Limited Company, namely, ELLBEE Hospitality Worldwide Private Limited (for short ‘EHWPL’), as per an operation and management agreement executed between him and EHWPL in 2013, which was extended on 17.02.2017. Petitioner contends that as per the agreement, EHWPL had to bear the expenses for operating the Hotel, including payment of statutory duties and taxes, day-to-day running of business, payment of bank loans, raising of loans for incurring the day-to-day direct and indirect expenditures, including Operations, Management, Business Development and marketing activities of the Hotel. However, Financial Costs, Property Tax, Insurance Premium etc. (i.e., all direct expenditures attributable to the assets of the petitioner) are mutatis mutandis to be borne by the petitioner, excluding the cost of depreciations, and EHWPL was entitled to 10% share in the operating profit and 90% of the operating profit was to be transferred to the petitioner.

4. Learned counsel for the petitioner contends that procedure prescribed in clause (a) and clause (b) of Section 148A has not been followed by the Assessing Officer while issuing notice, as such, the proceeding initiated against the petitioner is vitiated and the order passed under clause (d) of Section 148A thus is liable to be set aside. He contends that no enquiry was conducted regarding the information received and approval of the specified authority was also not obtained for conducting enquiry, as required by clause (a), therefore, the order passed under clause (d) is unsustainable. He further submits that only 7 days time was given to petitioner to submit reply to the notice dated 21.03.2024; while, clause (b) contemplates 30 days notice. He further submits that personal hearing was also not given to petitioner by the Assessing Officer, therefore, the provision contained in clause (b) has been violated.

5. The aforesaid submissions are bereft of merit. Clause (a) of Section 148A is an enabling provision, which empowers the Assessing Officer to conduct enquiry, if needed. In cases where conducting enquiry is found desirable, approval of specified authority would be necessary. Holding of enquiry thus is not mandatory, but discretionary. As such, the provision contained in clause (a