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

The Kerala High Court has held that if the income tax officer who hears the case does not render the decision, it would amount to a violation of the principles of natural justice.

The bench of Justice Murali Purushothaman has observed that the doctrine 'he who heard must decide or he who decides must hear' applies to statutory authorities. Section 148A of the Income Tax Act provides for the opportunity to be heard by the assessee.

The petitioner/assessee has filed this writ petition challenging an order passed by the Assessing Officer under Section 148A of the Income Tax Act, 1961.

The Assessing Officer issued a show cause notice under Clause (b) of Section 148A of the Income Tax Act to the petitioner, stating that the income chargeable to tax for the assessment year 2017–18 has escaped assessment and why a notice under Section 148 should not be issued. The petitioner submitted a reply. The petitioner was given an opportunity to hear. The petitioner was later served with proceedings under Clause (d) of Section 148A, asking the petitioner to file his return for the year.

The petitioner was also issued notice under Section 148 of the Act.

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.

Section 148A provides that the Assessing Officer shall, before issuing any notice under Section 148, conduct any inquiry, if required, with the prior approval of specified authorities, with respect to the information that suggests that the income chargeable to tax has escaped assessment. Provide an opportunity of being heard to the assessee by serving upon him a notice to show cause as to why a notice under Section 148 should not be issued on the basis of information that suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of the inquiry conducted, if any, as per clause (a). Decide, on the basis of material available on record, including the reply of the assessee, whether or not it is a fit case to issue a notice under Section 148, by passing an order. The opportunity to be heard by the assessee is explicit in the section itself.

The petitioner contended that the order was passed in violation of the principle 'he who decides must hear'.

The court, while disposing of the writ petition, quashed the order, which was not passed by the officer who heard the petitioner's order.

The court directed the assessing officer to pass fresh orders pursuant to show cause notice.

Counsel For Petitioner: Aditya Unnikrishnan, Priyadarsini S.

Counsel For Respondent: Jose Joseph

Case Title: Sri. Johnson Koomullil Thomas Versus The Income Tax Officer

Case No.: WP(C) No. 16702 Of 2024

Citation: 2024 LiveLaw (Ker) 435

Click Here To Read The Order