Hearing does not mean filing reply to SCN: Kerala HC quashes order u/s 148 A(d) of Income Tax Act on absence of personal hearing [Read Order]

The Kerala High Court quashed assessment order under Section 148 A(d) of the Income Tax Act, 1961 on the absence of personal hearing and observed that hearing does not mean filing reply to the Show cause notice (SCN).

The petitioner is a Co-operative society who provides credit facilities to its members and receive deposits from them. According to the petitioner, for the assessment year 2019-20, they did not have any taxable income under the Income Tax Act and they did not file return for the said assessment year.

The Income Tax Officer has issued a notice under Section 148A(a) of the Income Tax Act to the petitioner stating that the details of the information of the enquiry conducted on which reliance has been placed along with the documents enclosed in the notice suggest that the income of the petitioner had escaped assessment and therefore, the petitioner was required to so far as vide impugned notice in notice under Section 148A(a) Income Tax Act should not be issued.

The counsel for the petitioner submitted that when Section 148A(b) mandates that a personal hearing and without an opportunity of being heard, the order is in violation of Section 148A(b) of the Income Tax Act.

The Standing Counsel for the Income Tax Department submitted that ‘being heard’ does not mean that personal hearing is to be afforded to an assessee under Section 148A(b). The manner in which the petitioner is to be heard is prescribed under Section 148 A(b). The petitioner was given an opportunity as provided under Section 148A(b) except for hearing which is not mandatory.

A Single Bench of Justice Dinesh Kumar Singh observed that “Section 148A(b) begins with “provide an opportunity of being heard to the assessee”. Hearing does not mean filing reply to the show cause notice. If the provision of this Section contemplates opportunity of being heard that has to be construed as personal hearing. Therefore, I do not find substance in the submission of learned Standing Counsel that an opportunity of being heard to the assessee contemplated under Section 148A(b) does not necessarily mean personal hearing. In my view, opportunity of being heard means an opportunity of personal hearing to the assessee.”

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