2015 (5) TMI 1158 - HC - Income Tax

Settlement commission order - denial of natural justice - additional report was submitted by the Commissioner on 19.02.2015 in the course of the hearing being granted to the petitioner under Section 245D (2C) proviso and no opportunity was granted to the petitioner to respond to the same - Held that - The documents which were filed on 19.02.2015 constituted part of the report which the Commissioner had initially filed on 10.02.2015. We also note that the Settlement Commission had relied upon the documents which were filed on 19.02.2015. In this backdrop we are of the view that adequate opportunity was not given to the petitioner to respond to the said documents. For this reason we are setting aside the impugned order dated 24.02.2015. We are remitting the matter to the Settlement Commission to the stage of consideration of the Commissioner s report and of giving an opportunity of hearing to the petitioner. Mr. Syali the learned senior counsel appearing on behalf of the petitioner states that he shall not take the plea of limitation with regard to the additional documents dated19.02.2015 and they shall be construed and deemed to be part of the original report dated 10.02.2015 submitted by the Commissioner.

Summary

Issues:
Challenge to order of Income Tax Settlement Commission under Section 245D (2C) for rejecting application under Section 245C of the Income Tax Act, 1961 due to lack of opportunity to respond to additional report submitted by Commissioner.

Analysis:
The petitioner challenged the order of the Income Tax Settlement Commission dated 24.02.2015, contending that an additional report submitted by the Commissioner on 19.02.2015 during the hearing under Section 245D (2C) was not responded to by the petitioner, violating principles of natural justice. The petitioner argued that the order was passed without granting an opportunity to address the new documents, which were part of the original report filed earlier. The High Court noted that the Settlement Commission relied on the documents submitted on 19.02.2015 and agreed that the petitioner was not adequately given a chance to respond, leading to the setting aside of the impugned order.

The Court decided to remit the matter back to the Settlement Commission for reconsideration at the stage of considering the Commissioner's report, ensuring the petitioner receives a proper opportunity to be heard. The petitioner's counsel agreed not to raise a limitation plea regarding the additional documents, treating them as part of the original report. The Settlement Commission was directed to make a decision under Section 245D (2C) within 10 days from the first hearing, scheduled for 25.05.2015, requiring the petitioner to submit responses to the documents filed on 19.02.2015 before that date.

The High Court clarified that its decision to set aside the order did not imply any opinion on the case's merits, allowing the Settlement Commission to independently assess the matter. The writ petition was allowed to the extent of granting the petitioner a fair opportunity to respond to the additional documents and have the case reconsidered by the Commission.