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Issues involved: Appeal against rejection of writ petition seeking quashing of order by Central Board of Direct Taxes and mandamus for assessment consideration for the year 1985-86.
Issue 1: Nature of Power u/s 119(2)(b) of the Income-tax Act: The High Court considered whether the power exercised by the Board under section 119(2)(b) of the Income-tax Act is administrative or quasi-judicial in nature. The Court held that when the Board exercises power under the Act affecting the rights of an assessee, it cannot be considered merely administrative. The Court emphasized that the Board must consider all relevant facts and circumstances, provide reasons, and make an informed decision, indicating a quasi-judicial function. Issue 2: Requirement of Opportunity of Hearing: The Court also deliberated on whether it was necessary for the Board to afford an opportunity of hearing to the assessee before passing an order under section 119(2)(b) of the Act. It was established that when an authority performs a quasi-judicial function, it must adhere to the principles of natural justice, including providing an opportunity for the affected party to be heard. The Court highlighted the importance of oral or written submissions from the assessee to ensure a fair decision-making process. The Court analyzed the provisions of section 119 of the Act, emphasizing the distinction between administrative and quasi-judicial powers conferred upon the Board. It noted that while administrative powers are limited by certain conditions, quasi-judicial powers, such as those under section 119(2)(b), require a detailed consideration of the case and the provision of reasons for the decision. The Court cited a previous case to support the necessity of affording an opportunity of hearing to the assessee in such matters. In conclusion, the Court allowed the writ appeal, setting aside the order of the single judge and quashing the Board's decision dated July 17, 1990. The Board was directed to reconsider the assessee's application in accordance with the law and the observations made in the Court's order.
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