Kanhaiya Lal vs Commissioner of Income Tax and Another

M. Katju, J.—This writ petition has been filed against the order dated March 31, 1997, passed by the Commissioner of Income Tax, Agra, u/s 273A of the Income Tax Act, 1961. Counter affidavit and rejoinder affidavits exchanged and we have heard counsel for the parties.

For the relevant assessment year 1992-93, the assessee filed a return on August 31, 1992, showing an income of Rs. 33,387, but subsequently on August 24, 1993, he filed a revised return showing an income of Rs. 70,000. This was on account of a credit Rs. 69,853 in the State Bank account of the petitioner on January 15, 1992, in respect of a bank draft dated December 19, 1991, of the Viyas Bank Ltd. It is alleged that the revised return was filed voluntarily prior to the detection by the Assessing Officer. In respect of the above revised return, notice u/s 148 was issued by respondent No. 2. Notice u/s 143 was also issued requiring the petitioner to explain various queries including genuineness of the amount Rs. 70,000. The queries were based on an enquiry conducted from the Viyas Bank and raids conducted u/s 132 in the case of various persons at Bangalore who were allegedly involved in arranging such bogus drafts. As yet the assessment has not been completed nor penalty imposed. However, the petitioner filed an application u/s 273A before respondent No. 1 on August 18, 1993, copy of which is annexure 1. That application was rejected by the impugned order dated March 31, 1997, annexure 2 to the writ petition. It is alleged in para. 11 of the petition that the impugned order has been passed without proper application of mind. In para. 12 of the petition it is stated that the petitioner was not given proper opportunity of hearing. A notice dated March 11, 1997, was issued by respondent No. 1 to the petitioner fixing March 20, 1997, vide annexure 3 to the petition. The petitioner sent a telegram seeking adjournment vide annexure 4 to the petition. However, the next date fixed was March 26, 1997. It is alleged in para. 15 of the petition that the petitioner sent a medical certificate of his illnesses but the impugned order was passed ex parte vide annexure 5 to the petition. Hence, it is alleged that the impugned order is illegal.

A counter affidavit has been filed. In para. 5 of the same it is alleged that the assessee has filed a revised return on August 24 1993, after search and the statement given by Dr. Krishnappa on June 19, 1993. Hence, it is alleged that the return was filed only after the detection by the Depart- ment. In the revised return, the petitioner has surrendered only Rs. 70,000 for taxation and even now he has not surrendered the commission paid to receive this amount through alleged NRI account, as admitted by Dr. Krishnappa. Hence, it is alleged that the disclosure is not voluntary and in good faith and full and true disclosure has not been made. In para. 9 of the counter affidavit it is stated that the petitioner''s application for further adjournment was rejected after consideration of the material and documents. In para. 12 of the counter affidavit it is stated that the statement of Dr. Krishnappa was recorded on June 29, 1993. As per his statement, the assessee has also paid 32 to 35 commission on the amount in question.

The impugned order states that the assessee revised his return of income only after the enquiry from the Viyas Bank and the Department sent a report from Bangalore where a raid u/s 132 conducted on various persons living in Bangalore who were involved in issuing bogus drafts of various persons. In our opinion, this petition deserved to be allowed on the short ground mentioned in para. 18 of the writ petition, that neither the statement of S. N. Ladhani nor the report on enquiries with the Viyas Bank Ltd., Bangalore, and the report from the intelligence wing of the Department were confronted with the petitioner. The allegation in para. 18 of the writ petition has not been denied in the counter affidavit. What has been stated in para. 13 of the counter affidavit is that the contents of paragraph 18 of the writ petition are matters of record and hence need no reply.

It is a settled principle of natural justice that whenever any material is proposed to be used against a party copies of the same should be supplied in advance to that party so that he can have an opportunity to explain the same or rebut it. That was evidently not done in this case.

In view of the above we set aside the impugned order dated March 31, 1997. The writ petition is allowed but it is open to respondent No. 1 to pass a fresh order after supplying copies of the abovementioned documents to the petitioner and after giving an opportunity of hearing to him.