Facts of the Case

The present writ petition concerns Assessment Year 2019–20, wherein the petitioner, Sheevam Transolutions Pvt. Ltd., was alleged to have availed a bogus loan of ₹1,28,00,000/- from an entity named LTE Info Technologies Pvt. Ltd.

The allegation was communicated through a notice dated 27.02.2023 issued under Section 148A(b) of the Income Tax Act, 1961.

The petitioner responded on 04.03.2023, contending that:

  • The loan amount was only ₹64,00,000/- and not ₹1,28,00,000/-
  • The loan transaction was genuine
  • A request for personal hearing was specifically made

However, the Assessing Officer passed an order dated 28.03.2023 under Section 148A(d) without granting a personal hearing.

 Issues Involved

  1. Whether failure to grant a personal hearing violates principles of natural justice under Section 148A proceedings.
  2. Whether the Assessing Officer is bound to follow CBDT Guidelines dated 01.08.2022 and Instruction dated 22.08.2022.
  3. Whether an order passed under Section 148A(d) without hearing is sustainable in law.

 Petitioner’s Arguments

  • The impugned order was passed in violation of principles of natural justice.
  • Despite a specific request, no personal hearing was granted.
  • The procedure adopted was contrary to:
    • CBDT Guidelines dated 01.08.2022
    • CBDT Instruction dated 22.08.2022
  • The petitioner maintained that the loan transaction was genuine and the amount was wrongly alleged.

 Respondent’s Arguments

  • The Revenue relied on the material available on record.
  • It alleged that the petitioner had taken a bogus loan of ₹1.28 crore.
  • No counter-affidavit was filed; arguments were advanced based on existing records.

 Court’s Findings / Order

The Delhi High Court held that:

  • Personal hearing ought to have been granted when requested by the petitioner.
  • The failure to provide such opportunity violated principles of natural justice.
  • The impugned order dated 28.03.2023 under Section 148A(d) was set aside.
  • Consequently, the notice issued under Section 148 also stood quashed.
  • The matter was remanded to the Assessing Officer for de novo adjudication with proper hearing opportunity.

 Important Clarification by Court

  • The Assessing Officer must:
    • Issue prior notice indicating date and time of hearing
    • May conduct hearing through video conferencing (VC)
  • Fresh order must be passed only after granting due opportunity to the petitioner

 Sections Involved

  • Section 148A(b), Income Tax Act, 1961
  • Section 148A(d), Income Tax Act, 1961
  • Section 148, Income Tax Act, 1961
  • Principles of Natural Justice
  • CBDT Guidelines dated 01.08.2022
  • CBDT Instruction dated 22.08.2022

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/60809052023CW59982023_151449.pdf

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