Wp/4673/2012 Of Mrs.nikhat Fatima v. Additional Commissioner Of Income Tax

IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH ATHYDERABAD THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTISENGUPTA ANDTHE HON’BLE SRI JUSTICE SANJAY KUMAR WRIT PETITION Nos. 4562, 4640, 4648, 4652, 4673 and 4675 OF 2012 DATE: 23.01.2014 W.P.No.4562 of 2012Between: Syed Irfanuddin … Petitioner And Additional Commissioner of Income Tax,Hyderabad & others. … Respondents. This Court made the following: THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTAANDTHE HON’BLE SRI JUSTICE SANJAY KUMAR WRIT PETITION Nos.4562, 4640, 4648, 4652, 4673 and 4675 of 2012 COMMON ORDER:(Per the Hon’ble The Chief Justice Sri Kalyan Jyoti Sengupta) This batch of matters is taken up for hearing analogously, as in allthose matters the facts and issues, both on law and fact, are identical. The petitioners herein challenged the communication dated27.12.2011, whereby the Additional Commissioner of Income Tax-VI,Hyderabad, being the 1[st] respondent, has informed the petitioners that theaccounts for the assessment years 2007-08, 2008-09, 2009-10 and 2010-11are required to be audited especially under Section 142(2A) of the IncomeTax Act, 1961 (hereinafter referred to “the Act”). The language conveyed bythis communication is identical in each and every matter, which is reproducedhereunder. “You are hereby directed to get your accounts for theassessment years 2007-08, 2008-09, 2009-10 and 2010-11 auditedu/s. 142(2A) of the I.T. Act by M/s. Jawahar & Associates, C-5,Skylark Apartments, Basheerbagh, Hyderabad – 500 029. The order is issued with prior approval of the Commissionerof Income Tax-VI, Hyderabad.” It appears that the respondent authorities wanted to reopen theassessment under Section 148 of the Act and in connection therewith theaforesaid communication was made. Before this communication was made,on 16.12.2011 a notice was issued to show cause as to why the accountshould not be audited specially under Section 142(2A) of the Act. On receiptof the said notice, the petitioners replied to the same and asked for personal hearing in the matter. In each and every reply the aforesaid action wassought to be projected. It is stated in the writ petitions that without giving any personal hearingto any of the petitioners, the aforesaid communication was made, which isagain a non-speaking one. Learned counsel for the petitioners drew our attention to the proviso ofSection 142(2A) of the Act and contends that reasonable opportunity of beingheard means whenever a person wants a personal hearing, he should beheard and further reasons have to be assigned in the final order afterconsidering the objections. According to him, the aforesaid proviso has beenengrafted in the statute recognizing and accepting the principle of naturaljustice in all senses. Learned counsel for the Revenue, on the other hand, says that anotice was issued before taking a final decision and on receipt of theobjections and considering the same the impugned communication waspassed. According to him, no personal hearing is required to be given, asgiving an opportunity of putting forth an objection is good enough for thispurpose. He further argues that recording of reasons is not required, as it isimplicit in the communication that the objections raised by the petitioners aredeemed to have been overruled. In this case, the only question that arises is whether the respondentauthorities have followed the very object of the aforesaid proviso. Weaccordingly reproduce the aforesaid proviso as under. Learned counsel for the Revenue, on the other hand, says that anotice was issued before taking a final decision and on receipt of theobjections and considering the same the impugned communication waspassed. According to him, no personal hearing is required to be given, asgiving an opportunity of putting forth an objection is good enough for thispurpose. He further argues that recording of reasons is not required, as it isimplicit in the communication that the objections raised by the petitioners aredeemed to have been overruled. In this case, the only question that arises is whether the respondentauthorities have followed the very object of the aforesaid proviso. Weaccordingly reproduce the aforesaid proviso as under. “142(2A) - If, at any stage of the proceedings before him,the Assessing Officer, having regard to the nature and complexity ofthe accounts of the assessee and the interests of the revenue, is ofthe opinion that it is necessary so to do, he may, with the previousapproval of the Chief Commissioner or Commissioner, direct theassessee to get the accounts audited by an accountant, as defined inthe explanation below sub-section (2) of Section 288, nominated bythe Chief Commissioner or Commissioner in this behalf and tofurnish a report of such audit in the prescribed form duly signed andverified by such accountant and setting forth such particulars as maybe prescribed and such other particulars as the Assessing Officermay require: Provided that the Assessing Officer shall not direct theassessee to get the accountants so audited unless the assessee has been given a reasonable opportunity of being heard.” We feel that the learned counsel for the petitioners is right in sayingthat the aforesaid provision in the statute is to confirm the principle of naturaljustice, for when any audit report furnished to the returns is discarded,obviously the assessee has right to be informed as to why it has beendiscarded and more so why the fresh audit has to be done incurring furtherexpenses. Here, the petitioners raised objection to the aforesaid proposedaction and asked for personal hearing. We think that in a case of this naturethe compliance of natural justice would be done giving personal hearing. In apersonal hearing, the respondent authorities could attract the mind better wayacross the table the applicability and non-applicability of law for oralrepresentation. According to us, this is primary object of giving a personalhearing. When a party wants to be heard in-person, he should not be deniedwhen the statute provides for opportunity of being heard which includes notonly putting objection, but also to advance oral representation. We are unable to accept the contention of the learned counsel for therespondents, and accept the contention of the learned counsel for thepetitioners that in this case personal hearing is required. We therefore setaside the impugned communication and direct the 1[st] respondent to hear thepetitioners each of them by fixing the dates. On the date of hearing, if any ofthe petitioners does not turn up in spite of receipt of notice, then this order willstand recalled as far as the non-appearing petitioner is concerned. In theevent appearance is made, after hearing, the 1[st] respondent shall pass aspeaking order. This entire exercise shall be completed within a period offour weeks from the date of communication of this order. Accordingly, all the writ petitions are allowed. No costs. Pending miscellaneous petitions, if any, shall stand closed. ___________________ K.J. SENGUPTA, CJ Date: 23.01.2014ES ___________________ SANJAY KUMAR, J