Assessee who specifically seeks a personal hearing before a Section 148 reassessment decision cannot be denied that opportunity merely because a detailed written reply has already been filed.
The Rajasthan High Court held that merely permitting an assessee to submit a written reply does not satisfy the requirement of personal hearing under Section 148A of the Income Tax Act when the assessee has specifically sought such a hearing.
Purshotam Kumar Hissaria (the petitioner) held shares in Sunita Hydrocolloids Private Limited (SHPL) and Hissaria Hydrocolloids Private Limited (HHPL) which were disclosed in his income tax returns. A composite Scheme of Arrangement involving amalgamation and demerger of entities in the Sunita Group was sanctioned by the NCLT. The scheme resulted in restructuring of his existing shareholding.
Shares of SHPL and HHPL were subsequently allotted to him on March 20, 2020 without any fresh investment or cash consideration. Their cost of acquisition was determined under Sections 49(2), 49(2C) and 49(2D).
In his return, the petitioner disclosed the shares at an aggregate cost of Rs. 2.90 crore. SHPL and HHPL reported the shares under Schedule SH-1 at the value adopted under the Scheme of Arrangement. This resulted in a difference of Rs. 42.39 crore.
The petitioner’s case was that the difference arose from different reporting requirements and valuation methods. An assessment under Sections 143(3) read with 144B was completed on March 20, 2026 without any addition on this issue.
Ten days later, the Assessing Officer issued a notice under Section 148A(1) for AY 2020-21 proposing that Rs. 42.39 crore had escaped assessment. The petitioner filed a detailed reply explaining the NCLT scheme, the Section 49 computation and the reporting difference.
The petitioner’s counsel argued that despite specifically requesting a personal hearing, the Assessing Officer passed an order under Section 148A(3) solely on the written material and formed an adverse prima facie view.
The respondent counsel argued that the petitioner had received notice and had already filed a detailed reply with relevant documents making a further hearing unnecessary.
The Division Bench comprising Justice Arun Monga and Justice Yogendra Kumar Purohit observed
“Mere issuance of notice does not, by itself, amount to grant of an opportunity of hearing.”
The court further observed
“Mere filing of a reply does not fulfil the requirement of affording an opportunity of personal hearing.”
Finding violation of natural justice and Section 148A, the court set aside the order. It clarified that the Assessing Officer was free to proceed afresh after providing a personal hearing.
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How to cite
2026 TAXSCAN (HC) 1676
Before the Court
Rajasthan High Court
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