Kerala High Court Quashes Decision By Income Tax Officer Who Did Not Hear The Case

Kerala High Court Quashes Decision By Income Tax Officer Who Did Not Hear The Case

Justice Murali Purushothaman of the Kerala High Court emphasized that failure to render a decision by the income tax officer who presided over the case, would constitute a breach of principles of natural justice.

The court underscored the doctrine that statutory authorities must adhere to the principle of 'he who hears must decide or he who decides must hear'. Section 148A of the Income Tax Act stipulates that the assessee must be given an opportunity to be heard.

The petitioner/assessee filed a writ petition challenging an order issued by the Assessing Officer under Section 148A of the Income Tax Act, 1961. Initially, the Assessing Officer issued a show cause notice under Clause (b) of Section 148A to the petitioner, alleging that taxable income for the assessment year 2017–18 had not been assessed and seeking justification for issuing a notice under Section 148. The petitioner responded to the notice and was granted an opportunity to present their case. Subsequently, the petitioner received a communication under Clause (d) of Section 148A instructing them to file a return for the year. Additionally, a notice under Section 148 of the Act was also served to the petitioner.

The petitioner submitted that the orders have been issued without jurisdiction as they were not passed by the person who heard them. The threshold of Rs. 50 lakhs has not been attained so as to invoke the extended period of limitation under Section 149 of the Income Tax Act.

As per Section 148A, if an income tax officer believes that a taxpayer attempted to avoid paying taxes for any assessment year, the officer may notify the taxpayer that there will be a reassessment. According to Section 148A, the income tax officer must give the taxpayer a chance to present their case before sending them the notice. In other words, it gives the taxpayer an opportunity to be heard. The taxpayer may be given a minimum of seven days and a maximum of thirty days by the assessing officer to provide an explanation.

The petitioner contended that the order was passed in violation of the principle 'he who decides must hear'. The court disposed of the writ petition and directed the Assessing Officer to pass fresh orders pursuant to show cause notice.