2014 (8) TMI 166 - HC - Income Tax

Opportunity of being heard Attachment of movable and immovable property under Rule 48 Notice u/s 226(3)(x) Held that - The order passed under Rule 86 of the Act is not an appealable order under the Act - it is the last chance for the assessee to ensure that all facts are brought on record in the correct perspective taking into account the context - the normal practice appears to be to grant personal hearing before deciding the appeal - This fact cannot be lost sight of while holding that in cases such as granting of personal hearing would alone satisfy the requirement of natural justice thus, the order is set aside and the CIT is directed to give personal hearing to asssessee Decided in favour of Assessee.

Summary

Issues:
Challenge to order under Rule 86 of Income Tax Act - Lack of personal hearing granted to the Petitioner.

Analysis:
The judgment concerns a petition challenging an order passed under Rule 86 of Schedule II of the Income Tax Act, 1961, by the Commissioner of Income Tax. The order in question, dated 15th November 2011, upheld a previous order from 14th October 2008 by the Tax Recovery Officer, attaching the Petitioner's movable and immovable properties due to the failure of its former Chairman cum Director to fulfill tax obligations. The Petitioner was declared a defaulter for failing to pay the owed amount to its former Chairman cum Director, despite notice under Section 226(3)(X) of the Act.

The primary grievance raised by the Petitioner was the lack of a personal hearing granted before the passing of the impugned order on 15th November 2011. The Petitioner argued that a personal hearing is typically provided before the disposal of an appeal filed under Rule 86 of the Act. The Respondent contended that the Petitioner's representation was considered before the order was passed, emphasizing that there is no legal requirement for an oral hearing to comply with principles of natural justice. It was highlighted that the Petitioner did not specifically request a personal hearing in its representation to the Commissioner of Income Tax.

The court deliberated on the principles of natural justice, emphasizing that the requirement for a personal hearing may vary depending on the circumstances of each case. In this instance, where the Petitioner's immovable property had been attached and the impugned order was not appealable under the Act, the court deemed it crucial for the Petitioner to present all relevant facts effectively. Recognizing the gravity of the consequences for the Petitioner, the court asserted that a personal hearing was necessary, especially in matters involving factual complexities.

Consequently, the court set aside the order dated 15th November 2011 and directed the Commissioner of Income Tax to provide a personal hearing to the Petitioner within four weeks. The Petitioner agreed to attend the hearing without seeking adjournments. It was clarified that the attachment of the Petitioner's property, as per the earlier order from 14th October 2008, would persist until a final decision was made by the Appellate Authority. The judgment concluded with the disposal of the petition in accordance with the outlined directions.