2015 (2) TMI 845 - HC - Income Tax

Violation of the principles of natural justice - Denial of reasonable opportunity to the petitioner to represent its case - Held that - AO showed undue hurry in concluding the assessment proceedings, even though the time limit for completing the same was available till March 31, 2014, as pointed out to us by the learned counsel for the petitioner. When the petitioner was granted time till 03.30 p. m. on November 22, 2013, to reply to certain queries and when the petitioner had applied for extension of time indicating valid reasons, the Assessing Officer, in our opinion, ought not to have brushed aside such a request for adjournment and proceeded to a pass final order of assessment, that too, on the same day. Significantly, the application of the petitioner for time was not even decided. Without refusing time as prayed for and without communicating such refusal of adjournment to the petitioner, the Assessing Officer on the very same day, on which the hearing was fixed, proceeded to pass the order of assessment. This has resulted into gross violation of the principles of natural justice to give a fair hearing to the petitioner, on which short ground, we are inclined to quash the assessment order and remand the assessment proceedings before the Assessing Officer and disposal of the same in accordance with law. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Challenge to assessment order based on denial of reasonable opportunity to represent the case.

Analysis:
The petitioner challenged the assessment order dated November 22, 2013, on various grounds, leading to a limited question of denial of a reasonable opportunity to represent its case. The assessment for the year 2006-07 was reopened under section 148 of the Income-tax Act, 1961, with reasons provided. The petitioner objected to the reopening, citing the necessity of a speaking order as per the Supreme Court ruling in GKN Driveshafts (India) Ltd. v. ITO. Despite the petitioner's request for an adjournment to compile necessary details, the Assessing Officer proceeded to pass the assessment order on the same day, ignoring the request for an extension of time. This hasty conclusion of assessment proceedings was deemed a violation of natural justice, resulting in the quashing of the assessment order and remand of proceedings to the Assessing Officer for proper disposal.

The court highlighted the undue haste displayed by the Assessing Officer in concluding the assessment despite the availability of time until March 31, 2014, for completion. The petitioner's valid reasons for seeking an adjournment were not considered, and the Assessing Officer failed to communicate any decision regarding the adjournment request before passing the final order. This failure to provide a fair hearing and refusal to grant an adjournment amounted to a gross violation of natural justice. The court emphasized the importance of adhering to principles of natural justice and ordered the assessment proceedings to be remanded for a proper hearing and disposal in accordance with the law.

The court rejected the Revenue's argument that the assessment order could be challenged through statutory appeal, as the violation of natural justice was evident. Citing the decision in Whirlpool Corporation v. Registrar of Trade Marks, the court justified its intervention through the writ jurisdiction due to the clear breach of natural justice principles. Additionally, the court clarified that the petitioner's insistence on a speaking order regarding objections to the assessment reopening was not a prerequisite for further participation in the proceedings. The court left open the opportunity for the petitioner to raise other contentions against the assessment order in the future, if necessary. Consequently, the impugned order dated November 22, 2013, was quashed, and the Assessing Officer was directed to conduct a fresh hearing on January 20, 2014, without the need for a separate notice, allowing the petitioner to appear and present its case.