2012 (12) TMI 217 - HC - Income Tax

Rectification u/s 154 - short levy of interest u/s 234A,234B - held that - Ext.P4 order passed without furnishing the details sought for by the petitioner deprived her of an opportunity to file her objection to Ext.P2 and therefore Ext.P4 is an order passed in violation of the principles of natural justice - set aside Ext.P4 order and consequently Ext.P5 demand notice also - Respondent is directed to furnish the detailed working of the interest proposed in Ext.P2 to the petitioner on the production of copy of this judgment. Once the details are furnished, the petitioner will also be allowed to file her objection to Ext.P2 and will be afforded an opportunity of hearing and thereafter a consolidated order on Exts.P1 and P2 will be passed by the respondent - Writ Petition is disposed of.

Summary

Issues:
1. Rectification application under Section 154 of the Income Tax Act for the year 1989-90 pending.
2. Notice received proposing rectification for short levy of interest under Section 234A and B.
3. Failure to provide detailed working of interest before passing rectified order.
4. Violation of principles of natural justice in passing the order without providing details sought by the petitioner.

Analysis:
1. The petitioner filed an application (Ext.P1) for rectification of the assessment order for the year 1989-90 under Section 154 of the Income Tax Act. However, orders have not been passed on that application, and it is still pending. The petitioner requested the respondent to consider the pending application and pass orders accordingly.

2. Subsequently, the petitioner received a notice (Ext.P2) from the respondent proposing to rectify the assessment order due to the short levy of interest under Section 234A and B of the Act. Upon receiving this notice, the petitioner requested detailed working of the interest (Ext.P3), which was not provided by the respondent. Despite the lack of details, a rectified order (Ext.P4) and a demand notice (Ext.P5) were issued to the petitioner based on the proposed rectification.

3. The petitioner argued that the order (Ext.P4) was passed without furnishing the details of the interest sought by her, depriving her of the opportunity to file objections. The court found that the failure to provide the details before passing the order violated the principles of natural justice. Consequently, the court set aside the order (Ext.P4) and the demand notice (Ext.P5), directing the respondent to furnish the detailed working of the interest proposed in Ext.P2 to the petitioner.

4. The court ordered that once the details are provided, the petitioner should be allowed to file objections to Ext.P2 and be given an opportunity for a hearing. Subsequently, a consolidated order on Exts.P1 and P2 should be passed by the respondent, ensuring that the petitioner's right to be heard and defend against the proposed rectification is upheld. The writ petition was disposed of in favor of the petitioner, emphasizing the importance of adhering to the principles of natural justice in such proceedings.