Case Note & Summary
The petitioner, Popatlal Umedmalji Jain, an assessee under the Income Tax Act, 1961, regularly filed income tax returns. His wife ran a proprietary concern named 'Mansukh Sarees', and the petitioner worked there on a salary basis, also earning income from properties. For the assessment year 2019-2020, the petitioner furnished returns disclosing all sources of income. On 27th and 28th April 2019, the petitioner performed his daughter Bhagyashree's marriage at Corinttrians Resort and Club (Niyati Hotels and Resorts Pvt Ltd.), and the entire expenditure was accounted for in his income records. However, on 28th March 2023, the petitioner was served with a show cause notice under Section 148-A of the Income Tax Act, 1961, alleging that huge expenses on his daughter's marriage had escaped assessment under Section 147 of the Act, and he was called to submit an explanation. The petitioner replied to the notice, providing all details of his source of income with proof, and also prayed for a personal hearing to explain the accounts. Despite this, the respondent No. 1 (Income Tax Officer) passed the impugned order dated 10th April 2023 without providing an opportunity of personal hearing. The petitioner then filed a writ petition under Article 226 of the Constitution of India before the Bombay High Court, Bench at Aurangabad, seeking issuance of a Writ of Mandamus to quash and set aside the show cause notice dated 28th March 2023 and the order dated 10th April 2023. The court heard the learned advocates for both sides. The petitioner's counsel argued that the impugned notice and order were illegal and bad in law due to the denial of personal hearing, violating principles of natural justice. The court, after considering the submissions, found merit in the petitioner's contention and allowed the petition, quashing the impugned notice and order.
Headnote
A) Constitutional Law - Writ Jurisdiction - Article 226 of the Constitution of India - Quashing of Show Cause Notice - The petitioner invoked Article 226 to challenge a show cause notice under Section 148-A of the Income Tax Act, 1961 and the subsequent order, alleging violation of natural justice as personal hearing was denied despite request. The court held that the impugned notice and order were illegal and bad in law for non-compliance with principles of natural justice. (Paras 3-5) B) Income Tax - Reassessment - Section 148-A and Section 147 of the Income Tax Act, 1961 - Show Cause Notice - The petitioner, an assessee, was served with a show cause notice under Section 148-A alleging that huge marriage expenses escaped assessment under Section 147. The petitioner replied with details and proof and requested a personal hearing, but the respondent passed the order without providing such hearing. The court held that the denial of personal hearing violated natural justice, rendering the notice and order illegal. (Paras 4-5)
Issue of Consideration
Whether the impugned show cause notice under Section 148-A and the subsequent order under Section 148-A of the Income Tax Act, 1961 are liable to be quashed for non-compliance with principles of natural justice, specifically the denial of personal hearing despite the assessee's request.
Final Decision
The court allowed the writ petition, quashing and setting aside the show cause notice dated 28th March, 2023 and the order dated 10th April, 2023. Rule made absolute.
Law Points
- Natural justice
- personal hearing
- Section 148-A
- Section 147
- Income Tax Act
- 1961
- reassessment
- show cause notice
- violation of principles of natural justice
