Sai Balaji Extraction And Alloys PVT LTD Through Its Authorized Person Managing Director vs. Union Of INDIA And Others

Held

The Court held that Section 148A(b) of the Income Tax Act, 1961, does not mandate a personal hearing. The language of the section requires providing an opportunity of being heard by serving a show-cause notice and considering the assessee's reply. The absence of the words 'personal hearing' in the statute, coupled with the principle of interpreting statutes based on their plain language, led to this conclusion. The Court referred to the golden rule of interpretation, emphasizing that what is not written should not be read into the statute. Regarding the second issue, the Court held that the words 'if required' in Section 148A(a) grant discretion to the Assessing Officer to conduct an inquiry. The legislature's intent was not to make an inquiry mandatory but to allow the Assessing Officer to decide if it was necessary. The Court concluded that 'shall' in Section 148A(a) should be interpreted as 'may' in this context, preserving the discretion. The Court also noted that Section 148 permits assessees to raise all issues during the hearing and directed the Department to ensure adequate opportunity for the petitioners to contest the notice under Section 148, keeping all contentions open.

Facts

The petitioners, Satguru Sai Extrusions Private Limited and Sai Balaji Extraction and Alloys Pvt Ltd, filed writ petitions challenging notices issued under Section 148A(b) of the Income Tax Act, 1961, and subsequent orders passed under Section 148A(d). The petitioners had filed their Income Tax Returns for Assessment Year 2019-20 on October 31, 2019. Notices under Section 148A(b) were issued on March 1, 2023. The petitioners requested extensions, which were granted, and they submitted detailed written replies. Following these replies, orders under Section 148A(d) were passed on March 30, 2023 (for the first petitioner) and March 31, 2023 (for the second petitioner). Subsequently, notices under Section 148 of the Income Tax Act were issued, and proceedings are ongoing. The core of the dispute revolves around the interpretation of Section 148A(b) and 148A(a) concerning the requirement of a personal hearing and prior inquiry.

Key Issues

1. Whether Section 148A(b) of the Income Tax Act, 1961, read with the proviso thereunder, mandates a personal hearing for the assessee, or if a written reply is sufficient. The petitioner argued that a personal hearing is a mandatory component of the opportunity of being heard. The revenue contended that the statute does not explicitly mention 'personal hearing' and a written reply suffices. 2. Whether the phrase 'if required' in Section 148A(a) of the Income Tax Act, 1961, implies that an inquiry must be mandatorily conducted as a precondition to issuing a notice under Section 148A(b). The petitioner argued that the memorandum explaining the Finance Bill 2021 suggests an inquiry should be mandatory. The revenue argued that 'if required' grants discretion to the Assessing Officer. The court also considered the interpretation of statutes, referencing the golden rule of interpretation and the Mimansa rules.