1997 (8) TMI 47 - HC - Income Tax

Summary

Issues:
1. Assessment of income for the year 1993-94.
2. Rejection of application under section 220(6) of the Income-tax Act, 1961.
3. Violation of principles of natural justice in passing the impugned order.
4. Challenge to the correctness of previous judgments.

Analysis:

Assessment of Income:
For the assessment year 1993-94, the petitioner initially declared an income of Rs. 37,565. However, the Income-tax Officer assessed the petitioner's total income at Rs. 10,78,310, resulting in an additional demand of Rs. 8,97,907. The petitioner subsequently appealed this assessment before the Commissioner of Income-tax (Appeals), Bhatinda.

Rejection of Application under Section 220(6):
During the appeal process, the petitioner filed an application under section 220(6) of the Income-tax Act, 1961, requesting not to be declared as an assessee in default pending the appeal. The said application was rejected through an order dated June 17, 1997, without providing an opportunity of hearing to the petitioner or recording reasons for the rejection. The petitioner challenged this order on grounds of procedural irregularities.

Violation of Principles of Natural Justice:
The court found merit in the petitioner's argument, citing precedents that emphasized the requirement for the Income-tax Officer to grant a hearing and issue a reasoned order when deciding on applications under section 220(6) of the Act. The court held that the impugned order lacked compliance with the principles of natural justice as the petitioner was not given an opportunity to be heard, and the order was not supported by recorded reasons.

Challenge to Previous Judgments:
While the Department's counsel sought to challenge the correctness of previous judgments related to similar cases, the court declined to address this challenge in the present case. Instead, the court focused on upholding the principles established in the prior judgments, emphasizing the importance of affording the petitioner a fair hearing and providing a reasoned decision.

In conclusion, the court allowed the writ petition, setting aside the impugned order and subsequent attachment of the petitioner's bank account. The Income-tax Officer was directed to reconsider the application filed by the petitioner in accordance with the law and established principles of natural justice. The petitioner was instructed to appear before the Income-tax Officer on a specified date, with no costs imposed in this matter.