AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (2) TMI 50
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....ing 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....
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....nder :- "148A. The Assessing Officer shall, before issuing any notice under section 148,- (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, [*] by serving upon him a a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); (c) consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b); (d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a noti....
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....a particular provision. It is now well settled principle of interpretation of statute that plain language engrafted in a Section, must be given it's ordinary meaning. 10. The learned Advocate for the Petitioners has relied upon a consenting order passed by this Court at the Principal Seat dated 22.12.2023 in WP No. 15215/2023 (Babitha Bhaskar Prabhu Vs. Union of India and Others), wherein the Respondent agreed to grant a personal hearing. On such premises, the order passed u/s 148A(d) was quashed and set aside. It does not call for a debate that a consenting order is not a precedent and normally should not be cited. 11. The learned Advocate for the Petitioners has then relied upon an order passed by the Calcutta High Court dated 13.10.2023 in Nitin Agarwal Vs. the Income Tax Officer, Ward-46(1), Kolkata and Others (APO/79/2023, IA No.GA/1/2023). In the said matter, the ground for challenging the order u/s 148A(d) was that it was passed in violation of the principles of natural justice, in as much as, the appellant was not granted an opportunity of a personal hearing. After considering the facts of the case, the Calcutta High Court recorded that, "As pointed out earlier, the n....
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....l hearing", the Department is bound only to consider the reply of the Assessee furnished in response to the show cause notice referred to in Clause (b) on a conjoint reading of sub-clause '(c)'. 14. The learned Advocate for the Petitioners has placed reliance upon the "MEMORANDUM EXPLAINING THE PROVISIONS IN THE FINANCE BILL, 2021", more particularly, Clause (vii) appearing on internal page No. 48 of the Memorandum. We deem it appropriate to reproduce clauses (vii) and (viii) appearing on internal page No. 48 and the portion there below appearing on page No. 49, including clause (ix) and clause (x) on internal page No. 50, hereunder :- "(vii) New Section 148A of the Act proposes that before issuance of notice the Assessing Officer shall conduct enquiries, if required, and provide an opportunity of being heard to the assessee. After considering his reply, the Assessing Office shall decide, by passing an order, whether it is a fit case for issue of notice under section 148 and serve a copy of such order along with such notice on the assessee. The Assessing Officer shall before conducting any such enquiries or providing opportunity to the assessee or passing such order obt....
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....rity for approving enquiries, providing opportunity, passing order under section 148A of the Act and for issuance of notice under section 148 of the Act are proposed to be -- (a) Principal Commissioner or Principal Director or Commissioner or Director, if three years or less than three years have elapsed from the end of the relevant assessment year; (b) Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year. (x) Once assessment or reassessment or re-computation has started the Assessing officer is proposed to be empowered (as at present) to assess or reassess the income in respect of any issue which has escaped assessment and which comes to his notice subsequently in the course of the proceeding under this procedure notwithstanding that the procedure prescribed in section 148A was not followed before issuing such notice for such income. These amendments will take effect from 1st April, 2021." [Emphasis supplied] 15. After perusing....
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....ature. grown-up men by hundreds have been discussing for years whether we should drink a glass of water with the right hand or the left, whether the hand should be washed three times or four times, whether we should gargle five or six times. What can you expect from men who pass their lives in discussing such momentous questions as these and writing most learned philosophies on them!" For Vivekananda, it is a "sure sign of softening of the brain when the mind cannot grasp the higher problems of life; all originality is lost, the mind has lost all its strength, its activity, and its power of thought, and just tries to go round and round the smallest curve it can find." Sans religious overtones, let us apply that aphorism to the judicial way of life. It fits. The procedure is our perennial curve. It is time we grappled with and grasped the higher problems of law. Let us preserve the judicial strength, activity, and vigour to do justice-the eventual jurisprudential destiny. The procedure is only a path, not the destination; only a means, not the end. 5. Indeed, judges have been entrusted with the discretion, and the suitor should trust them in their exercising it." 17. In ....
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....nouncements on the lines of MP industries. Let us not burden this judgment with any more. 64. Indeed, as the Supreme Court has held time and again, an oral hearing is a facet of fair hearing, but it is not an indispensable part of it. In a proceeding, a court in a tribunal may modulate its procedure-- sometimes allowing oral arguments and some other times requiring the parties to file their written arguments. More particularly, when the statute confers wide procedural powers and allows a judicial or quasi- judicial authority to regulate its own proceedings, we cannot read into those proceedings the requirement of oral hearing at every stage of the proceedings, it is, then, sure to defeat the legislative purpose, as well as the mandate. 65. A case in point is the Supreme Court's decision in Ch. Rama Rao v. The Lokayukta. In that case, the petitioner contended that he had had no opportunity before the Lokayukta recommended actions against him. The Supreme Court disagreed, however. After referring to the relevant statutory provision, Ch. Rama Rao has distinguished between the preliminary investigation and regular investigation. Avoiding elaboration, I may note th....
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.... a notice by the Assessing Officer u/s 148A(a). The contention of the Petitioner is that the enquiry is mandatory. The contention of the Department in the specific facts of this case is, that an enquiry was never conducted and it is not a mandate to conduct an enquiry, more so, in the light of the averments set out in the affidavit in reply filed by the Deputy Commissioner of Income Tax, Circle-I, Aurangabad, dated 30.09.2023. The specific averments which are articulated for our consideration, are as under :- "The Assessee has filed written reply on 23.03.2023. The AO considered the reply of the assessee and on verification of reply of the assessee, it was seen that assessee company has made transaction with M/s Hitakrit Trading Private Limited. The assessee company has filed copies of sales bills, transport bills and copy of account extracts of purchases in its books of account. It was seen that the assessee company has purchased goods of Rs. 84,53,550/- (84,53,550/- + GST) and has filed transport records and bills but, the credentials of the M/s Hitakrit Trading Private Limited were doubtful. To ascertain the financial credibility of the above mentioned entity efforts we....
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....uiry, if required, with the prior approval of the specified authority..............". The words "if required" actually indicate a discretion under sub-clause (a). The opening words of Section 148A require the Assessing Officer to do a particular thing before issuing notice u/s 148. The acts that are to be performed by the Assessing Officer would include conducting any enquiry, if required. Under clause (b), an opportunity of being heard is to be provided to the Assessee. Clause (c) requires that the reply of the Assessee has to be taken into account and clause (d) requires an order to be passed for forming an opinion that a notice u/s 148 has to be issued, on the basis of the material available on record, which includes the reply of the Assessee. 21. The question that begs for an answer is as to whether the conducting of an enquiry should be deemed to be a mandate, meaning thereby that an enquiry has to be mandatorily conducted prior to issuing a show cause notice. If this meaning, in the form of a mandate, to be lent to the issuance of a notice under clause (b) was the intent and object of the legislation, the words "if required" would not have been added to the words "conduct ....
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....he legislature cannot be enlarged when the language of the provision is plain and unambiguous. In other words statutory enactments must ordinarily be construed according to its plain meaning and no words shall be added, altered or modified unless it is plainly necessary to do so to prevent a provision from being unintelligible, absurd, unreasonable, unworkable or totally irreconcilable with the rest of the statute. 26. It is also well settled that a beneficent provision of legislation must be liberally construed so as to fulfill the statutory purpose and not to frustrate it. 27. An owner of a property, subject to reasonable restrictions which may be imposed by the Legislature, is entitled to enjoy the property in any manner he likes. A right to use a property in a particular manner or in other words a restriction imposed on user thereof except in the mode and manner laid down under statute would not be presumed." 25. In the State of Karnataka Versus Viswabharathi House Building Coop. Society and Others [(2003) 2 SCC 412], the Hon'ble Supreme Court has observed in paragraph Nos. 63 and 64 as under :- "63. The terminology used in Section 25 of the Act to....
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....ay what we mean. If we do not follow the literal rule of interpretation, social life will become impossible, and we will not understand each other. If we say that a certain object is a book, then we mean it is a book. If we say it is a book, but we mean it is a horse, table or an elephant, then we will not be able to communicate with each other. Life will become impossible. Hence, the meaning of the literal rule of interpretation is simply that we mean what we say and we say what we mean. 25. In this connection, we may also refer to the Mimansa Rules of Interpretation which were our traditional principles of interpretation used for thousand of years by our jurists. It is deeply regrettable that in our law courts today these principles are not cited. Today, our so called educated people are largely ignorant about the great intellectual achievements of our ancestors, and the intellectual treasury which they have bequeathed to us. The Mimansa Rules of Interpretation are one of these great achievements, but regrettably they are hardly ever used in our law courts. 26. It may be mentioned that it is not stated anywhere in the Constitution of India that only Maxwell'....